SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
(Amendment No. 2)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
(Name of Subject Company)
AIMCO PROPERTIES, L.P.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(Bidders)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(Cusip Number of Class of Securities)
------------------------------------
Patrick Foye
Executive Vice President
AIMCO-GP, Inc.
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222
(303) 757-8101
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
------------------------------------
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
Transaction Valuation*: $2,960,700 Amount of Filing Fee: $592.14
- --------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the purchase of
10,425 units of limited partnership interest ("Units") of the subject
partnership for $284 per Unit. The amount of the filing fee, calculated in
accordance with Section 14(g)(3) and Rule 0-11(d) under the Securities Exchange
Act of 1934, as amended, equals 1/50th of one percent of the aggregate of the
cash offered by the bidders.
(cover page 1 of 2)
<PAGE>
(cover page 2 of 2)
|_| Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
Amount Previously Paid: Not Applicable
Form or Registration No.: Not Applicable
Filing Party: Not Applicable
Date Filed: Not Applicable
<PAGE>
CUSIP No. NONE 14D-1 AND 13D/A Page 3
================================================================================
1. Name of Reporting Persons; I.R.S. Identification Nos. of Above Persons
AIMCO PROPERTIES, L.P.
84-1275621
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4 Sources of Funds
WC
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
5,862.34
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares |_|
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
25.335%
- --------------------------------------------------------------------------------
10. Type of Reporting Person
PN
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. NONE 14D-1 AND 13D/A Page 4
================================================================================
1. Name of Reporting Persons; I.R.S. Identification Nos. of Above Persons
APARTMENT INVESTEMENT AND MANAGEMENT COMPANY
84-1259577
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4 Sources of Funds
N/A
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Maryland
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
None
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares |_|
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
N/A
- --------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1/AMENDMENT NO. 2 TO SCHEDULE 13D
This Tender Offer Statement on Schedule 14D-1 (the "Statement") also
constitutes Amendment No. 2 to the Statement on Schedule 13D in connection with
the beneficial ownership of AIMCO Properties, L.P. and Apartment Investment and
Management Company ("AIMCO") of Units (as defined below). The item numbers and
responses thereto set forth below are in accordance with the requirements of
Schedule 14D- 1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Winthrop Growth Investors 1 Limited
Partnership, a Massachusetts limited partnership (the "Partnership"). The
address of the Partnership's principal executive offices is 55 Beattie Place,
Greenville, South Carolina 29602.
(b) This Statement relates to an offer by AIMCO Properties, L.P., a
Delaware limited partnership (the "Purchaser"), to purchase up to 10,425 of the
outstanding units of limited partnership interest ("Units") of the Partnership
at a purchase price of $284 per Unit, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated July 23,
1999 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any supplements or amendments, collectively constitute the
"Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2) hereto,
respectively. The information set forth in the Offer to Purchase under
"Introduction" is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 13
("Background of the Offer") is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser and AIMCO
(collectively, the "Bidders"). The information set forth in the Offer to
Purchase under "Introduction," in Section 11 ("Certain Information Concerning
the Purchaser, AIMCO and AIMCO-GP, Inc.") and in Schedule I to the Offer to
Purchase is incorporated herein by reference.
5
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(e)-(f) Except for the acquisition of 990 Units pursuant to a tender offer
made by the Purchaser in April 1999, during the last five years, none of the
Bidders nor, to the best of their knowledge, any of the persons listed in
Schedules I to the Offer to Purchase (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining further violations of or prohibiting activities
subject to federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under "The
Offer-Section 9. Background and Reasons for the Offer--General and -Prior Tender
Offers", "The Offer-Section 11. Conflicts of Interest and Transactions with
Affiliates", "The Offer-Section 13-Certain Information Concerning the
Partnership--Distributions and -Compensation Paid to the General Partner and Its
Affiliates" is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in the Offer to Purchase under "The
Offer-Section 15. Source of Funds" is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Offer to Purchase under "The
Offer-Section 9. Background of the Offer" is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under "The
Offer-Section 8. Information Concerning Us and Certain of Our Affiliates" is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
6
<PAGE>
The information set forth in the Offer to Purchase under "The Offer-Section
7. Effects of the Offer, Section 8. Information Concerning Us and Our
Affiliates, Section 9. Background of the Offer, and Section 10. Conflicts of
Interest and Transactions with Affiliates is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "The Offer-Section
19. Fees and Expenses" is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The financial statements included in the Purchaser's Annual Report on Form
10K for the year ended December 31, 1998, which are listed on the Index to
Financial Statements on page F-1 of such report, are incorporated herein by
reference. Such reports and other information may be inspected at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549; Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can also be obtained from the Public Reference Room of
the SEC in Washington, D.C. at prescribed rates and from the SEC's site on the
World Wide Web at http://www.sec.gov.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) The information set forth in the Offer to Purchase under "The
Offer-Section 18. Certain Legal Matters" is incorporated herein by reference.
(e) The information set forth in the Offer to Purchase under "The
Offer-Section 9. Background and Reasons for the Offer-Certain Litigation" is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, copies of which are filed as Exhibits (a)(1) and (a)(2)
hereto, respectively, is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
7
<PAGE>
(a)(1) Offer to Purchase, dated July 23, 1999.
(a)(2) Letter of Transmittal and Related Instructions.
(a)(3) Cover Letter, dated July 23, 1999, from the Purchaser to the Limited
Partners of the Partnership.
(b)(1) Amended and Restated Credit Agreement (Unsecured Revolver-to-Term
Facility), dated as of October 1, 1998, among the Purchaser, Bank or America
National Trust and Savings Association, and BankBoston, N.A. (Exhibit 10.1 to
AIMCO's Current Report on Form 8-K, dated October 1, 1998, is incorporated
herein by this reference).
(b)(2) First Amendment to Credit Agreement, dated as of November 6, 1998,
by and among the Purchaser, the financial institutions listed on the signature
pages thereof and Bank or America National Trust and Savings Association
(Exhibit 10.2 to AIMCO's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, is incorporated herein by this reference).
8
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: July 23, 1999
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, Inc.
By: Patrick J. Foye
------------------------------
Patrick J. Foye
Executive Vice President
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: Patrick J. Foye
------------------------------
Patrick J. Foye
Executive Vice President
9
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
(a)(1) Offer to Purchase, dated July 23, 1999.
(a)(2) Letter of Transmittal and Related Instructions.
(a)(3) Cover Letter, dated July 23, 1999, from the Purchaser to the Limited
Partners of the Partnership.
(b)(1) Amended and Restated Credit Agreement (Unsecured Revolver-to-Term
Facility), dated as of October 1, 1998, among the Purchaser, Bank or
America National Trust and Savings Association, and BankBoston, N.A.
(Exhibit 10.1 to AIMCO's Current Report on Form 8-K, dated October 1,
1998, is incorporated herein by this reference).
(b)(2) First Amendment to Credit Agreement, dated as of November 6, 1998, by
and among the Purchaser, the financial institutions listed on the
signature pages thereof and Bank or America National Trust and Savings
Association (Exhibit 10.2 to AIMCO's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998, is incorporated herein by
this reference).
10
<PAGE>
Offer to Purchase For Cash
AIMCO Properties, L.P.
is offering to purchase up to 10,425 units of limited partnership interest in
WINTHROP GROWTH INVESTORS I LIMITED PARTNERSHIP
for $284 per unit in CASH
Our offer price will be reduced for any distributions subsequently made by your
partnership prior to the expiration of our offer.
We will only accept a maximum of 10,425 of the outstanding units in response to
our offer. If more units are tendered to us, we will generally accept units on a
pro rata basis according to the number of units tendered by each person.
Our offer and your withdrawal rights will expire at 5:00 p.m., New York City
time, on August 25, 1999, unless we extend the deadline.
You will not pay any fees or commissions if you tender your units.
Our offer is not subject to any minimum number of units being tendered.
See "Risk Factors" beginning on page 1 of this offer to purchase for a
description of risk factors that you should consider in connection with our
offer, including the following:
o We determined the offer price of $284 per unit without any arms-length
negotiations. Accordingly, our offer price may not reflect the fair
market value of your units.
o Your general partner and the property manager of the properties are
affiliates of ours and, therefore, the general partner has substantial
conflicts of interest with respect to our offer.
o We are making this offer with a view to making a profit and,
therefore, there is a conflict between our desire to purchase your
units at a low price and your desire to sell your units at a high
price.
o Continuation of your partnership will result in our affiliates
continuing to receive management fees from your partnership. Such fees
would not be payable if your partnership was liquidated.
o It is possible that we may conduct a subsequent offer at a higher
price.
o For any units that we acquire from you, you will not receive any
future distributions from operating cash flow of your partnership or
upon a sale or refinancing of properties owned by your partnership.
o If we acquire a substantial number of units, we will increase our
ability to influence voting decisions with respect to your partnership
and may control such voting decisions.
If you desire accept our offer, you should complete and sign the letter of
transmittal in accordance with the instructions thereto and mail or deliver the
signed letter of transmittal and any other required documents to River Oaks
Partnership Services, Inc., which is acting as Information Agent in connection
with our offer, at one of its addresses set forth on the back cover of this
offer to purchase. Questions and requests for assistance or for additional
copies of this offer to purchase or the letter of transmittal may also be
directed to the Information Agent at (888) 349-2005.
July 23, 1999
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION...................................................................1
RISK FACTORS...................................................................1
No Third Party Valuation or Appraisal; No Arms-Length Negotiation ........1
No Fairness Opinion From a Third Party ...................................2
Offer Price May Not Represent Fair Market Value...........................2
Offer Price Does Not Reflect Future Prospects ............................2
Offer Price Based on Our Estimate of Liquidation Proceeds ................2
Offer Price May Not Represent Liquidation Value ..........................2
Continuation of the Partnership; No Time Frame Regarding Sale of
Properties .............................................................2
Holding Units May Result in Greater Future Value .........................2
Conflicts of Interest With Respect to the Offer; No General Partner
Recommendation .........................................................3
Conflicts of Interest Relating to Management Fees ........................3
Possible Subsequent Offer at a Higher Price ..............................3
Recognition of Taxable Gain on a Sale of Your Units ......................3
Loss of Future Distributions from Your Partnership .......................3
Possible Increase in Control of Your Partnership by Us ...................4
Recognition of Gain Resulting from Possible Future Reduction in Your
Partnership Liabilities ................................................4
Possible Termination of Your Partnership for Federal Income Tax
Purposes ...............................................................4
THE OFFER......................................................................4
Section 1. Terms of the Offer; Expiration Date; Proration...............4
Section 2. Acceptance for Payment and Payment for Units.................5
Section 3. Procedure for Tendering Units................................6
Section 4. Withdrawal Rights............................................7
Section 5. Extension of Tender Period; Termination; Amendment...........8
Section 6. Certain Federal Income Tax Matters...........................9
Section 7. Effects of the Offer........................................12
Section 8. Information Concerning Us and Certain of our Affiliates.....13
Section 9. Background and Reasons for the Offer........................14
Section 10. Position of the General Partner of Your Partnership With
Respect to the Offer........................................20
Section 11. Conflicts of Interest and Transactions with Affiliates......21
Section 12. Future Plans of the Purchaser...............................22
Section 13. Certain Information Concerning Your Partnership.............23
Section 14. Voting Power................................................28
Section 15. Source of Funds.............................................28
Section 16. Dissenter's Rights..........................................29
Section 17. Conditions of the Offer.....................................29
Section 18. Certain Legal Matters.......................................31
Section 19. Fees and Expenses...........................................31
ANNEX I OFFICERS AND DIRECTORS..............................................I-1
(i)
<PAGE>
INTRODUCTION
We are offering to purchase up to 10,425 units, representing approximately
45.05% of the outstanding units of limited partnership interest in your
partnership, for the purchase price of $284 per unit, net to the seller in cash,
without interest, less the amount of distributions, if any, made by your
partnership in respect of any unit from the date hereof until the expiration
date. Our offer is made upon the terms and subject to the conditions set forth
in this offer to purchase and in the accompanying letter of transmittal.
If you tender your units in response to our offer you will not be obligated
to pay any commissions or partnership transfer fees but will be obligated to pay
any transfer taxes (see Instruction 8 to the letter of transmittal). We have
retained River Oaks Partnership Services, Inc. to act as the Information Agent
in connection with our offer. We will pay all charges and expenses in connection
with the services of the Information Agent. The offer is not conditioned on any
minimum number of units being tendered. However, certain other conditions do
apply. See "The Offer -- Section 17." You may tender all or any portion of the
units that you own. Under no circumstances will we be required to accept any
unit if the transfer of that unit to us would be prohibited by the agreement of
limited partnership of your partnership.
Our offer will expire at 5:00 P.M., New York City time, on August 25, 1999
unless extended. If you desire to accept our offer, you must complete and sign
the letter of transmittal in accordance with the instructions contained therein
and forward or hand deliver it, together with any other required documents, to
the Information Agent, either with your units to be tendered or in compliance
with the specified procedures for guaranteed delivery of units. You may withdraw
your tender of units pursuant to the offer at any time prior to the expiration
date of our offer and, if we have not accepted such units for payment, on or
after August 25, 1999.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, or AIMCO. AIMCO is a
self-administered and self-managed real estate investment trust engaged in the
ownership, acquisition, development, expansion and management of multifamily
apartment properties. As of March 31, 1999, AIMCO owned or managed 373,409
apartment units in 2,071 properties located in 49 states, the District of
Columbia and Puerto Rico. AIMCO's Class A Common Stock is listed and traded on
the New York Stock Exchange under the symbol "AIV."
As a result of our October 1, 1998 merger with Insignia Financial Group,
Inc. and our February 26, 1999 merger with Insignia Properties Trust, we
acquired control of the general partner of your partnership and the company that
manages the residential properties owned by your partnership.
RISK FACTORS
Before deciding whether or not to tender any of your units, you should
consider carefully the following risks and disadvantages of the offer:
No Third Party Valuation or Appraisal; No Arms-Length Negotiation
We did not base our valuation of the properties owned by your partnership
on any third-party appraisal or valuation. We established the terms of our offer
without any arms-length negotiation. The terms of the offer could differ if they
were subject to independent third party negotiations. It is uncertain whether
our offer price reflects the value which would be realized upon a sale of your
units to a third party.
(i)
<PAGE>
No Fairness Opinion From a Third Party
We did not obtain an opinion from a third party that our offer price is
fair from a financial point of view.
Offer Price May Not Represent Fair Market Value
There is no established or regular trading market for your units, nor is
there another reliable standard for determining the fair market value of the
units. Our offer price does not necessarily reflect the price that you would
receive in an open market for your units. Such prices could be higher than our
offer price.
Offer Price Does Not Reflect Future Prospects
Our offer price is based on your partnership's historical property income.
It does not ascribe any value to potential future improvements in the operating
performance of your partnership's properties.
Offer Price Based on Our Estimate of Liquidation Proceeds
The offer price represents only our estimate of the amount you would
receive if we liquidated the partnership. In determining the liquidation value,
we used the direct capitalization method to estimate the value of your
partnership's properties because we think a prospective purchaser of the
properties would value the properties using this method. In doing so, we applied
a capitalization rate to your partnership's property income for the year ended
December 31, 1998. If property income for a different period or a different
capitalization rate was used, a higher valuation could result. Other methods of
valuing your units could also result in a higher valuation.
Offer Price May Not Represent Liquidation Value
The actual proceeds obtained from a liquidation are highly uncertain and
could be more than our estimate. Accordingly, our offer price could be less than
the net proceeds that you would realize upon an actual liquidation of your
partnership.
Continuation of the Partnership; No Time Frame Regarding Sale of Properties
Your general partner (which is our affiliate) is proposing to continue to
operate your partnership and not to attempt to liquidate it at the present time.
Thus, our offer does not satisfy any expectation that you would receive the
return of your investment in the partnership through a sale of any property. It
is not known when the properties owned by your partnership may be sold. There
may be no way to liquidate your investment in the partnership in the future
until the properties are sold and the partnership is liquidated. The general
partner of your partnership continually considers whether a property should be
sold or otherwise disposed of after consideration of relevant factors, including
prevailing economic conditions, availability of favorable financing and tax
considerations, with a view to achieving maximum capital appreciation for your
partnership. At the current time the general partner of your partnership
believes that a sale of the properties would not be advantageous given market
conditions, the condition of the properties and tax considerations. In
particular, the general partner considered the changes in the local rental
market, the potential for appreciation in the value of the properties and the
tax consequences to you and your partners on a sale of the properties. We cannot
predict when any property will be sold or otherwise disposed of.
Holding Units May Result in Greater Future Value
You might receive more value if you retain your units until your
partnership is liquidated.
2
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Conflicts of Interest With Respect to the Offer; No General Partner
Recommendation
We have the right to control the general partner of your partnership and,
therefore, the general partner of your partnership has substantial conflicts of
interest with respect to our offer. We are making this offer with a view to
making a profit. There is a conflict between our desire to purchase your units
at a low price and your desire to sell your units at a high price. We determined
our offer price without negotiation with any other party, including any general
or limited partner. Because of our affiliation with the general partner of your
partnership, your general partner makes no recommendation as to whether you
should tender your units.
Conflicts of Interest Relating to Management Fees
Since our subsidiaries receive fees for managing your partnership and its
properties, a conflict of interest exists between our continuing the partnership
and receiving such fees, and the liquidation of the partnership and the
termination of such fees. Another conflict is the fact that a decision of the
limited partners of your partnership to remove, for any reason, the general
partner of your partnership or the property manager of any property owned by
your partnership would result in a decrease or elimination of the substantial
fees paid to them for services provided to your partnership.
Possible Subsequent Offer at a Higher Price
It is possible that we may conduct a subsequent offer at a higher price.
Such a decision will depend on, among other things, the performance of the
partnership, prevailing economic conditions, and our interest in acquiring
additional limited partnership interests.
Recognition of Taxable Gain on a Sale of Your Units
Your sale of units for cash will be a taxable sale, with the result that
you will recognize taxable gain or loss measured by the difference between the
amount realized on the sale and your adjusted tax basis in the units of limited
partnership interest of your partnership you transfer to us. The "amount
realized" with respect to a unit of limited partnership interest of your
partnership you transfer to us will be equal to the sum of the amount of cash
received by you for the unit sold pursuant to the offer plus the amount of
partnership liabilities allocable to the unit. The particular tax consequences
for you of our offer will depend upon a number of factors related to your tax
situation, including your tax basis in your units of limited partnership
interest of your partnership you transfer to us, whether you dispose of all of
your units and whether you have available suspended passive losses, credits or
other tax items to offset any gain recognized as a result of your sale of your
units of limited partnership interest of your partnership. Therefore, depending
on your basis in the units and your tax position, your taxable gain and any tax
liability resulting from a sale of units to us pursuant to the offer could
exceed our offer price. Because the income tax consequences of tendering units
will not be the same for everyone, you should consult your own tax advisor to
determine the tax consequences of the offer to you.
Loss of Future Distributions from Your Partnership
If you tender your units in response to our offer, you will transfer to us
all right, title and interest in and to all of the units we accept, and the
right to receive all distributions in respect of such units on and after the
date on which we accept such units for purchase. Accordingly, for any units that
we acquire from you, you will not receive any future distributions from
operating cash flow of your partnership or upon a sale or refinancing of
properties owned by your partnership.
3
<PAGE>
Possible Increase in Control of Your Partnership by Us
Decisions with respect to the day-to-day management of your partnership are
the responsibility of the general partner. Because the general partner of your
partnership is our affiliate, we control the management of your partnership.
Under your partnership's agreement of limited partnership, limited partners
holding a majority of the outstanding units must approve certain extraordinary
transactions, including the removal of the general partner, the addition of a
new general partner, most amendments to the partnership agreement and the sale
of all or substantially all of your partnership's assets. If we acquire all the
units we are tendering for we will own a majority of the outstanding units and
will have the ability to control any vote of the limited partners.
Recognition of Gain Resulting from Possible Future Reduction in Your Partnership
Liabilities
Generally, a decrease in your share of partnership liabilities is treated,
for Federal income tax purposes, as a deemed cash distribution. Although no
general partner of your partnership has any current plan or intention to reduce
the liabilities of your partnership, it is possible that future economic,
market, legal, tax or other considerations may cause a general partner to reduce
the liabilities of your partnership. If you retain all or a portion of your
units of limited partnership interest of your partnership and the liabilities of
your partnership were to be reduced, you will be treated as receiving a
hypothetical distribution of cash resulting from a decrease in your share of the
liabilities of the partnership. Any such hypothetical distribution of cash would
be treated as a nontaxable return of capital to the extent of your adjusted tax
basis in your units and thereafter as gain.
Possible Termination of Your Partnership for Federal Income Tax Purposes
If there is a sale or exchange of 50% or more of the total interest in
capital and profits of your partnership within any 12-month period, including
sales or exchanges resulting from our offer, your partnership will terminate for
Federal income tax purposes. Any such termination may, among other things,
subject the assets of your partnership to longer depreciable lives than those
currently applicable to the assets of your partnership. This would generally
decrease the annual average depreciation deductions allocable to you if you do
not tender all of your interests of your partnership (thereby increasing the
taxable income allocable to your interests of your partnership each year), but
would have no effect on the total depreciation deductions available over the
useful lives of the assets of your partnership. Any such termination may also
change (and possibly shorten) your holding period with respect to your interests
of your partnership that you choose to retain.
THE OFFER
Section 1. Terms of the Offer; Expiration Date; Proration.
Upon the terms and subject to the conditions of the offer, we will accept
(and thereby purchase) up to 10,425 units that are validly tendered on or prior
to the expiration date and not withdrawn in accordance with the procedures set
forth in "The Offer - Section 4." For purposes of the offer, the term
"expiration date" shall mean 5:00 p.m., New York City time, on August 25, 1999,
unless we in our sole discretion shall have extended the period of time for
which the offer is open, in which event the term "expiration date" shall mean
the latest time and date on which the offer, as extended by us, shall expire.
See "The Offer -- Section 5" for a description of our right to extend the period
of time during which the offer is open and to amend or terminate the offer.
The purchase price per unit will automatically be reduced by the aggregate
amount of distributions per unit, if any, made by your partnership to you on or
after the commencement of our offer and prior to the date on which we acquire
your units pursuant to our offer.
If, prior to the expiration date, we increase the consideration offered to
limited partners pursuant to the offer, the increased consideration will be paid
for all units accepted for payment pursuant to the offer, whether or not the
units were tendered prior to the increase in consideration.
If more than 10,425 units are validly tendered prior to the expiration date
and not properly withdrawn prior to the expiration date in accordance with the
procedures specified in Section 4, we will, upon the terms and subject
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to the conditions of the offer, accept for payment and pay for an aggregate of
10,425 units of the units so tendered, pro rata according to the number of units
validly tendered by each limited partner and not properly withdrawn on or prior
to the expiration date, with appropriate adjustments to avoid purchases of
fractional units. If the number of units validly tendered and not properly
withdrawn on or prior to the expiration date is less than or equal to 10,425
units, we will purchase all units so tendered and not withdrawn, upon the terms
and subject to the conditions of the offer.
If proration of tendered units is required, then, subject to our obligation
under Rule 14e-1(c) under the Securities Exchange Act of 1934 (the "Exchange
Act") to pay limited partners the purchase price in respect of units tendered or
return those units promptly after termination or withdrawal of the offer, we do
not intend to pay for any units accepted for payment pursuant to the offer until
the final proration results are known. Notwithstanding any such delay in
payment, no interest will be paid on the cash offer price.
The offer is conditioned on satisfaction of certain conditions. The offer
is not conditioned upon any minimum amount of units being tendered. See "The
Offer -- Section 17," which sets forth in full the conditions of the offer. We
reserve the right (but in no event shall we be obligated), in our reasonable
discretion, to waive any or all of those conditions. If, on or prior to the
expiration date, any or all of the conditions have not been satisfied or waived,
we reserve the right to (i) decline to purchase any of the units tendered,
terminate the offer and return all tendered units to tendering limited partners,
(ii) waive all the unsatisfied conditions and purchase all units validly
tendered, (iii) extend the offer and, subject to the withdrawal rights of
limited partners, retain the units that have been tendered during the period or
periods for which the offer is extended, or (iv) amend the offer. The transfer
of units will be effective May 1, 1999.
This offer is being mailed to the persons shown by your partnership's
records to have been limited partners or, in the case of units owned of record
by Individual Retirement Accounts and qualified plans, beneficial owners of
units, as of July 23, 1999.
Section 2. Acceptance for Payment and Payment for Units
Upon the terms and subject to the conditions of the offer, we will
purchase, by accepting for payment, and will pay for, up to 10,425 units validly
tendered as promptly as practicable following the expiration date. A tendering
beneficial owner of units whose units are owned of record by an Individual
Retirement Account or other qualified plan will not receive direct payment of
the offer price; rather, payment will be made to the custodian of such account
or plan. In all cases, payment for units purchased pursuant to the offer will be
made only after timely receipt by the Information Agent of a properly completed
and duly executed letter of transmittal and other documents required by the
letter of transmittal. See "The Offer -- Section 3." UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE OFFER PRICE BY REASON OF ANY DELAY IN MAKING SUCH
PAYMENT.
For purposes of the offer, we will be deemed to have accepted for payment
pursuant to the offer, and thereby purchased, validly tendered units, if, as and
when we give verbal or written notice to the Information Agent of our acceptance
of those units for payment pursuant to the offer. Payment for units accepted for
payment pursuant to the offer will be made through the Information Agent, which
will act as agent for tendering limited partners for the purpose of receiving
cash payments from us and transmitting cash payments to tendering limited
partners.
If any tendered units are not accepted for payment by us for any reason,
the letter of transmittal with respect to such units not purchased may be
destroyed by us or the Information Agent. If, for any reason, acceptance for
payment of, or payment for, any units tendered pursuant to the offer is delayed
or we are unable to accept for payment, purchase or pay for units tendered
pursuant to the offer, then, without prejudice to our rights under "The Offer
Section 17," the Information Agent may, nevertheless, on our behalf retain
tendered units, and those units may not be withdrawn except to the extent that
the tendering limited partners are entitled to withdrawal rights as described in
"The Offer - Section 4"; subject, however, to our obligation under Rule 14e-1(c)
under the Exchange Act, to pay you the offer price in respect of units tendered
or return those units promptly after termination or withdrawal of the offer.
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We reserve the right to transfer or assign, in whole or in part, to one or
more of our affiliates, the right to purchase units tendered pursuant to the
offer, but no such transfer or assignment will relieve us of our obligations
under the offer or prejudice your rights to receive payment for units validly
tendered and accepted for payment pursuant to the offer.
Section 3. Procedure for Tendering Units.
Valid Tender. To validly tender units pursuant to the offer, a properly
completed and duly executed letter of transmittal and any other documents
required by such letter of transmittal must be received by the Information
Agent, at one of its addresses set forth on the back cover of this offer to
purchase, on or prior to the expiration date. You may tender all or any portion
of your units. No alternative, conditional or contingent tenders will be
accepted.
Signature Requirements. If the letter of transmittal is signed by the
registered holder of a unit and payment is to be made directly to that holder,
then no signature guarantee is required on the letter of transmittal. Similarly,
if a unit is tendered for the account of a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc. or a commercial bank, savings bank, credit union, savings and loan
association or trust company having an office, branch or agency in the United
States (each an "Eligible Institution"), no signature guarantee is required on
the letter of transmittal. However, in all other cases, all signatures on the
letter of transmittal must be guaranteed by an Eligible Institution.
In order for you to tender in the offer, your units must be validly
tendered and not withdrawn on or prior to the expiration date.
The method of delivery of the letter of transmittal and all other required
documents is at your option and risk and delivery will be deemed made only when
actually received by the Information Agent. If delivery is by mail, registered
mail with return receipt requested is recommended. In all cases, sufficient time
should be allowed to assure timely delivery.
Appointment as Proxy; Power of Attorney. By executing the letter of
transmittal, you are irrevocably appointing us and our designees as your proxy,
in the manner set forth in the letter of transmittal, each with full power of
substitution, to the fullest extent of the your rights with respect to the units
tendered by and accepted for payment by you. Each such proxy shall be considered
coupled with an interest in the tendered units. Such appointment will be
effective when, and only to the extent that, we accept the tendered unit for
payment. Upon such acceptance for payment, all prior proxies given by you with
respect to the units will, without further action, be revoked, and no subsequent
proxies may be given (and if given will not be effective). We and our designees
will, as to those units, be empowered to exercise all voting and other rights as
a limited partner as we, in our sole discretion, may deem proper at any meeting
of limited partners, by written consent or otherwise. We reserve the right to
require that, in order for units to be deemed validly tendered, immediately upon
our acceptance for payment for the units, we must be able to exercise full
voting rights with respect to the units, including voting at any meeting of
limited partners then scheduled or acting by written consent without a meeting.
By executing the letter of transmittal, you agree to execute all such documents
and take such other actions as shall be reasonably required to enable the units
tendered to be voted in accordance with out directions. The proxy and power of
attorney granted by you to us upon your execution of the letter of transmittal
will remain effective and be irrevocable for a period of ten years following the
termination of our offer.
By executing the letter of transmittal, you also irrevocably constitute and
appoint us and our managers and designees as your attorneys-in-fact, each with
full power of substitution, to the full extent of your rights with respect to
the units tendered by you and accepted for payment by us. Such appointment will
be effective when, and only to the extent that, we pay for your units. You agree
not to exercise any rights pertaining to the tendered units without our prior
consent. Upon such payment, all prior powers of attorney granted by you with
respect to such units will, without further action, be revoked, and no
subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment as attorneys-in-fact, we and our
managers and designees each will have the power, among other things, (i) to
transfer ownership of such units on the partnership books maintained by your
general partner (and execute and deliver any accompanying evidences of transfer
and authenticity it may deem necessary or appropriate in connection therewith),
(ii) upon receipt by the Information Agent of the offer
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consideration, to become a substituted limited partner, to receive any and all
distributions made by your partnership on or after the date on which we acquire
such units, and to receive all benefits and otherwise exercise all rights of
beneficial ownership of such units in accordance with the terms of our offer,
(iii) to execute and deliver to the general partner of your partnership a change
of address form instructing the general partner to send any and all future
distributions to which we are entitled pursuant to the terms of the offer in
respect of tendered units to the address specified in such form, and (iv) to
endorse any check payable to you or upon your order representing a distribution
to which we are entitled pursuant to the terms of our offer, in each case, in
your name and on your behalf.
Assignment of Interest in Future Distributions. By executing the letter of
transmittal, you will irrevocably assign to us and our assigns all of your
right, title and interest in and to any and all distributions made by your
partnership from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up, or dissolution, payments in
settlement of existing or future litigation, and all other distributions and
payments from and after the expiration date of our offer, in respect of the
units tendered by you and accepted for payment and thereby purchased by us. If,
after the unit is accepted for payment and purchased by us, you receive any
distribution from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up or dissolution, payments in
settlement of existing or future litigation and all other distributions and
payments, from your partnership in respect of such unit, you will agree to
forward promptly such distribution to us.
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of units pursuant to our offer will be determined by us, in our reasonable
discretion, which determination shall be final and binding on all parties. We
reserve the absolute right to reject any or all tenders of any particular unit
determined by us not to be in proper form or if the acceptance of or payment for
that unit may, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive or amend any of the conditions of the offer that we are
legally permitted to waive as to the tender of any particular unit and to waive
any defect or irregularity in any tender with respect to any particular unit of
any particular limited partner. Our interpretation of the terms and conditions
of the offer (including the letter of transmittal) will be final and binding on
all parties. No tender of units will be deemed to have been validly made unless
and until all defects and irregularities have been cured or waived. Neither us,
the Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any unit or will
incur any liability for failure to give any such notification.
Backup Federal Income Tax Withholding. To prevent the possible application
of back-up Federal income tax withholding of 31% with respect to payment of the
offer price, you may have to provide us with your correct taxpayer
identification number. See the instructions to the letter of transmittal and
"The Offer -- Section 6."
FIRPTA Withholding. To prevent the withholding of Federal income tax in an
amount equal to 10% of the amount realized on the disposition (the amount
realized is generally the offer price plus the partnership liabilities allocable
to each unit purchased), you must certify that the you are not a foreign person
if you tender units. See the instructions to the letter of transmittal and "The
Offer - Section 6."
Transfer Taxes. The amount of any transfer taxes (whether imposed on the
registered holder of units or any person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the such taxes or exemption therefrom is submitted.
Binding Agreement. A tender of a unit pursuant to any of the procedures
described above and the acceptance for payment of such unit will constitute a
binding agreement between the tendering unitholder and us on the terms set forth
in this offer to purchase and the related letter of transmittal.
Section 4. Withdrawal Rights.
You may withdraw tendered units at any time prior to the expiration date or
on or after September 21, 1999, if the units have not been previously accepted
for payment.
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For a withdrawal to be effective, a written notice of withdrawal must be
timely received by the Information Agent at one of its addresses set forth on
the back cover of the offer to purchase. Any such notice of withdrawal must
specify the name of the person who tendered, the number of units to be withdrawn
and the name of the registered holder of such units, if different from the
person who tendered. In addition, the notice of withdrawal must be signed by the
person who signed the letter of transmittal in the same manner as the letter of
transmittal was signed.
If purchase of, or payment for, a unit is delayed for any reason, or if we
are unable to purchase or pay for a unit for any reason, then, without prejudice
to our rights under the offer, tendered units may be retained by the Information
Agent; subject, however, to our obligation, pursuant to Rule 14e-1(c) under the
Exchange Act, to pay the offer price in respect of units tendered or return
those units promptly after termination or withdrawal of our offer.
Any units properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of our offer. However, withdrawn units may be
re-tendered at any time prior to the expiration date by following the procedures
described in "The Offer - Section 3."
All questions as to the validity and form (including time of receipt) of
notices of withdrawal will be determined by us in our reasonable discretion,
which determination shall be final and binding on all parties. Neither we, the
Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Section 5. Extension of Tender Period; Termination; Amendment.
We expressly reserve the right, in our reasonable discretion, at any time
and from time to time, (i) to extend the period of time during which our offer
is open and thereby delay acceptance for payment of, and payment for, any unit,
(ii) to terminate the offer and not accept any units not theretofore accepted
for payment or paid for if any of the conditions to the offer are not satisfied
or if any event occurs that might reasonably be expected to result in a failure
to satisfy such conditions, (iii) upon the occurrence of any of the conditions
specified in "The Offer - Section 17," to delay the acceptance for payment of,
or payment for, any units not already accepted for payment or paid for, and (iv)
to amend our offer in any respect (including, without limitation, by increasing
the consideration offered, increasing or decreasing the units being sought, or
both). Notice of any such extension, termination or amendment will promptly be
disseminated to you in a manner reasonably designed to inform you of such
change. In the case of an extension of the offer, the extension will be followed
by a press release or public announcement which will be issued no later than
9:00 a.m., New York City time, on the next business day after the scheduled
expiration date of our offer, in accordance with Rule 14e-1(d) under the
Exchange Act.
If we extend the offer, or if we delay payment for a unit (whether before
or after its acceptance for payment) or are unable to pay for a unit pursuant to
our offer for any reason, then, without prejudice to our rights under the offer,
the Information Agent may retain tendered units and those units may not be
withdrawn except to the extent tendering unitholders are entitled to withdrawal
rights as described in "The Offer Section 4"; subject, however, to our
obligation, pursuant to Rule 14e-l(c) under the Exchange Act, to pay the offer
price in respect of units tendered or return those units promptly after
termination or withdrawal of the offer.
If we make a material change in the terms of our offer, or if we waive a
material condition to our offer, we will extend the offer and disseminate
additional tender offer materials to the extent required by Rule 14e-1 under the
Exchange Act. The minimum period during which the offer must remain open
following any material change in the terms of the offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, if any, will depend upon the facts and circumstances, including
the materiality of the change. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought or a change
in any dealer's soliciting fee, if any, a minimum of ten business days from the
date of such change is generally required to allow for adequate dissemination to
unitholders. Accordingly, if prior to the expiration date, we increase (other
than increases of not more than two percent of the outstanding units) or
decrease the number of units being sought, or increase or decrease the offer
price, and if the offer is scheduled to expire at any time earlier than the
tenth business day after the date that notice of such increase or decrease is
first published, sent or given to unitholders, the offer will be extended at
least until the expiration of such ten business days. As used in the offer to
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purchase, "business day" means any day other than a Saturday, Sunday or a
Federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
Section 6. Certain Federal Income Tax Matters.
The following summary is a general discussion of certain of the Federal
income tax consequences of the offer that may be relevant to (i) unitholders who
tender some or all of their units for cash pursuant to our offer, and (ii)
unitholders who do not tender any of their units pursuant to our offer. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), Treasury Regulations, rulings issued by the Internal
Revenue Service (the "IRS"), and judicial decisions, all as of the date of this
offer to purchase. All of the foregoing are subject to change or alternative
construction with possible retroactive effect, and any such change or
alternative construction could affect the continuing accuracy of this summary.
Such summary is based on the assumption that your partnership will be operated
in accordance with its organizational documents including its certificate of
limited partnership and agreement of limited partnership. This summary is for
general information only and does not purport to discuss all aspects of Federal
income taxation which may be important to a particular person in light of its
investment or tax circumstances, or to certain types of investors subject to
special tax rules (including financial institutions, broker-dealers, insurance
companies, and, except to the extent discussed below, tax-exempt organizations
and foreign investors, as determined for United States Federal income tax
purposes), nor (except as otherwise expressly indicated) does it describe any
aspect of state, local, foreign or other tax laws. This summary assumes that the
units constitute capital assets in the hands of the unitholders (generally,
property held for investment). No advance ruling has been or will be sought from
the IRS regarding any matter discussed in this offer to purchase. Further, no
opinion of tax counsel has been obtained with regard to the offer.
The Federal income tax treatment of a unitholder participating in the offer
depends in some instances on determinations of fact and interpretations of
complex provisions of Federal income tax law for which no clear precedent or
authority may be available. Accordingly, you should consult your tax advisor
regarding the Federal, state, local and foreign tax consequences of selling the
limited partnership interests in your partnership represented by units pursuant
to our offer or of a decision not to sell in light of your specific tax
situation.
Tax Consequences to Limited Partners Tendering Units for Cash. You will
recognize gain or loss on a sale of a unit of limited partnership of your
partnership pursuant to the offer equal to the difference between (i) your
"amount realized" on the sale and (ii) your adjusted tax basis in the unit sold.
The "amount realized" with respect to any units of limited partnership of your
partnership will be equal to the sum of the amount of cash received by you for
the unit sold pursuant to the offer plus the amount of partnership liabilities
allocable to the unit (as determined under Section 752 of the Internal Revenue
Code). Thus, your tax liability resulting from a sale of a unit of limited
partnership of your partnership could exceed the cash received upon such sale.
Adjusted Tax Basis. If you acquired your units of limited partnership of
your partnership for cash, your initial tax basis in such units is generally
equal to the cash investment in your partnership increased by your share of
partnership liabilities at the time you acquired such units. Your initial tax
basis generally has been increased by (i) your share of partnership income and
gains, and (ii) any increases in your share of partnership liabilities, and has
been decreased (but not below zero) by (i) your share of partnership cash
distributions, (ii) any decreases in your share of partnership liabilities,
(iii) your share of partnership losses, and (iv) your share of nondeductible
partnership expenditures that are not chargeable to capital. For purposes of
determining your adjusted tax basis in units of limited partnership of your
partnership immediately prior to a disposition of your units, your adjusted tax
basis in your units will include your allocable share of partnership income,
gain or loss for the taxable year of disposition. If your adjusted tax basis is
less than your share of partnership liabilities (e.g., as a result of the effect
of net loss allocations and/or distributions exceeding the cost of your unit),
your gain recognized with respect to a unit of limited partnership of your
partnership pursuant to the offer will exceed the cash proceeds realized upon
the sale of such unit.
Character of Gain or Loss Recognized Pursuant to the Offer. Except as
described below, the gain or loss recognized by you on a sale of a unit of
limited partnership of your partnership pursuant to the offer generally will be
treated as a long-term capital gain or loss if you held the unit for more than
one year. Long-term capital gains
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recognized by individuals and certain other noncorporate taxpayers generally
will be subject to a maximum Federal income tax rate of 20%. If the amount
realized with respect to a unit of limited partnership of your partnership that
is attributable to your share of "unrealized receivables" of your partnership
exceeds the tax basis attributable to those assets, such excess will be treated
as ordinary income. Among other things, "unrealized receivables" include
depreciation recapture for certain types of property. In addition, the maximum
Federal income tax rate applicable to persons who are noncorporate taxpayers for
net capital gains attributable to the sale of depreciable real property (which
may be determined to include an interest in a partnership such as your units)
held for more than one year is currently 25% (rather than 20%) to the extent of
previously claimed depreciation deductions that would not be treated as
"unrealized receivables."
If you tender a unit of limited partnership interest of your partnership in
the offer, you will be allocated a share of partnership taxable income or loss
for the year of tender with respect to any units sold. You will not receive any
future distributions on units of limited partnership interest of your
partnership tendered on or after the date on which such units are accepted for
purchase and, accordingly, you may not receive any distributions with respect to
such accreted income. Such allocation and any partnership cash distributions to
you for that year will affect your adjusted tax basis in your unit of limited
partnership interest of your partnership and, therefore, the amount of your
taxable gain or loss upon a sale of a unit pursuant to the offer.
Passive Activity Losses. The passive activity loss rules of the Internal
Revenue Code limit the use of losses derived from passive activities, which
generally include investments in limited partnership interests such as the units
of limited partnership interest of your partnership. An individual, as well as
certain other types of investors, generally cannot use losses from passive
activities to offset nonpassive activity income received during the taxable
year. Passive losses that are disallowed for a particular tax year are
"suspended" and may be carried forward to offset passive activity income earned
by the investor in future taxable years. In addition, such suspended losses may
be claimed as a deduction, subject to other applicable limitations, upon a
taxable disposition of the investor's interest in such activity.
Accordingly, if your investment in your units is treated as a passive
activity, you may be able to shelter gain from the sale of your units of limited
partnership interest of your partnership pursuant to the offer with passive
losses in the manner described below. If you sell all or a portion of your units
of limited partnership interest of your partnership pursuant to the offer and
recognize a gain on your sale, you will be entitled to use your current and
"suspended" passive activity losses (if any) from your partnership and other
passive sources to offset that gain. In general, if you sell all or a portion of
your units of limited partnership interest of your partnership pursuant to the
offer and recognize a loss on such sale, you will be entitled to deduct that
loss currently (subject to other applicable limitations) against the sum of your
passive activity income from your partnership for that year (if any) plus any
passive activity income from other sources for that year. If you sell all of
your units pursuant to the offer, the balance of any "suspended" losses from
your partnership that were not otherwise utilized against passive activity
income as described in the two preceding sentences will no longer be suspended
and will therefore be deductible (subject to any other applicable limitations)
by you against any other income for that year, regardless of the character of
that income. Accordingly, you should consult your tax advisor concerning
whether, and the extent to which, you have available "suspended" passive
activity losses from your partnership or other investments that may be used to
offset gain from the sale of units pursuant to the offer.
Information Reporting, Backup Withholding and FIRPTA. If you tender any
units, you must report the transaction by filing a statement with your Federal
income tax return for the year of the tender which provides certain required
information to the IRS. To prevent the possible application of back-up Federal
income tax withholding of 31% with respect to the payment of the offer
consideration, you may have to provide us with your correct taxpayer
identification number. See the instructions to the letter of transmittal.
Gain realized by a foreign person on the sale of a unit pursuant to the
offer will be subject to Federal income tax under the Foreign Investment in Real
Property Tax Act. Under these provisions of the Internal Revenue Code, the
transferee of an interest held by a foreign person in a partnership which owns
United States real property generally is required to deduct and withhold 10% of
the amount realized on the disposition. Amounts withheld would be creditable
against a foreign person's Federal income tax liability and, if in excess
thereof, a refund could be
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obtained from the Internal Revenue Service by filing a U.S. income tax return.
See the instructions to the letter of transmittal.
Tax Consequences to Non-Tendering and Partially-Tendering Limited Partners.
Section 708 of the Internal Revenue Code provides that if there is a sale or
exchange of 50% or more of the total interest in capital and profits of a
partnership within any 12-month period, such partnership terminates for Federal
income tax purposes. It is possible that our acquisition of units pursuant to
the offer could result in such a termination of your partnership.
Notwithstanding the fact that the agreement of limited partnership of your
partnership may prohibit a transfer of ownership of an interest that would cause
a tax termination, the assignment to us of rights to distributions with respect
to units may cause a termination of your partnership for Federal income tax
purposes. If your partnership is deemed to terminate for tax purposes, the
following Federal income tax events will be deemed to occur: the terminated
partnership will be deemed to have contributed all of its assets (subject to its
liabilities) to a new partnership in exchange for an interest in the new
partnership and, immediately thereafter, the old partnership will be deemed to
have distributed interests in the new partnership to the remaining limited
partners in proportion to their respective interests in the old partnership in
liquidation of the old partnership.
A remaining limited partner will not recognize any gain or loss upon the
deemed distribution or upon the deemed contribution and the capital accounts of
the remaining limited partners in the old partnership will carry over intact
into the new partnership. A termination will change (and possibly shorten) a
remaining partner's holding period with respect to its retained units in your
partnership for federal income tax purposes.
The new partnership's adjusted tax basis in its assets will be the same as
the old partnership's basis in such assets immediately before the termination. A
termination may also subject the assets of the new partnership to depreciable
lives in excess of those currently applicable to the old partnership. This would
generally decrease the annual average depreciation deductions allocable to the
remaining limited partners for a number of years following consummation of the
offer (thereby increasing the taxable income allocable to their units in each
such year), but would have no effect on the total depreciation deductions
available over the useful lives of the assets of your partnership.
Elections as to certain tax matters previously made by the old partnership
prior to termination will not be applicable to the new partnership unless the
new partnership chooses to make the same elections.
Additionally, upon a termination for tax purposes, the old partnership's
taxable year will close for all limited partners. In the case of a remaining
limited partner or a partially tendering limited partner reporting on a tax year
other than a calendar year, the closing of the partnership's taxable year may
result in more than 12 months' taxable income or loss of the old partnership
being includible in such limited partner's taxable income for the year of
termination.
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Section 7. Effects of the Offer.
Future Control by AIMCO. Because we control the general partner of your
partnership, we have control over the management of your partnership. If we are
successful in acquiring more than 24.665% of the units pursuant to the offer, we
will own in excess of 50% of the total outstanding units and, as a result, will
be able to control the outcome of all voting decisions with respect to your
partnership. Even if we acquire a lesser number of units pursuant to the offer,
however, because we currently own approximately 25.335% of the outstanding
limited partnership units, we will be able to significantly influence the
outcome of all voting decisions with respect to your partnership. In general, we
will vote the units owned by us in whatever manner we deem to be in our best
interests, which may not be in the interest of other limited partners. This
could (1) prevent non-tendering limited partners from taking action they desire
but that we oppose and (2) enable us to take action desired by us but opposed by
non-tendering limited partners. We also own the company that manages the
properties owned by your partnership. In the event that we acquire a substantial
number of units pursuant to the offer, removal of a property manager may become
more difficult or impossible.
Distributions to Us. If we acquire units in the offer, we will participate
in any subsequent distributions to limited partners to the extent of the units
purchased.
Partnership Status. We believe our purchase of units should not adversely
affect the issue of whether your partnership is classified as a partnership for
Federal income tax purposes.
Business. Our offer will not affect the operation of the properties owned
by your partnership. We will continue to control the general partner of your
partnership and the property manager, both of which will remain the same.
Consummation of the offer will not affect any agreement of limited partnership,
the operations of any partnership, the business and properties owned by any
partnership, the management compensation payable to any general partner or any
other matter relating to your partnership, except it would result in us
increasing our ownership of units. We have no current intention of changing the
fee structure for your general partner or the manager of your partnership's
properties.
Effect on Trading Market; Registration Under 12(g) of the Exchange Act. If
a substantial number of units are purchased pursuant to the offer, the result
will be a reduction in the number of limited partners in your partnership. In
the case of certain kinds of equity securities, a reduction in the number of
securityholders might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the security. In this case,
however, there is no established public trading market for the units and,
therefore, we do not believe a reduction in the number of limited partners will
materially further restrict your ability to find purchasers for your units
through secondary market transactions.
The units are registered under Section 12(g) of the Exchange Act, which
means, among other things, that your partnership is required to file periodic
reports with the SEC and to comply with the SEC's proxy rules. We do not expect
or intend that consummation of the offer will cause the units to cease to be
registered under Section 12(g) of the Exchange Act. If the units were to be held
by fewer than 300 persons, your partnership could apply to de-register the units
under the Exchange Act. Because the units are widely-held, however, we believe
that, even if we purchase the maximum number of units in the offer, the units
will be held of record by more than 300 persons.
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<PAGE>
Section 8. Information Concerning Us and Certain of Our Affiliates
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, a Maryland corporation ("AIMCO").
AIMCO is a real estate investment trust that owns and manages multifamily
apartment properties throughout the United States. Based on apartment unit data
compiled by the National Multi-Housing Council, we believe that, as of March 31,
1999, AIMCO was one of the largest owners and managers of multifamily apartment
properties in the United States, with a total portfolio of 373,409 apartment
units in 2,071 properties located in 49 states, the District of Columbia and
Puerto Rico. AIMCO's Class A Common Stock is listed and traded on the New York
Stock Exchange under the symbol "AIV." As of March 31, 1999, AIMCO:
o owned or controlled 63,069 units in 240 apartment properties;
o held an equity interest in 168,817 units in 891 apartment properties;
and
o managed 141,523 units in 940 apartment properties for third party
owners and affiliates.
Our general partner is AIMCO-GP, Inc., which is a wholly owned subsidiary
of AIMCO. Our principal executive offices are located at 1873 South Bellaire
Street, Denver, Colorado 80222, and our telephone number is (303) 757-8101.
The names, positions and business addresses of the directors and executive
officers of AIMCO and your general partner (which is our affiliate) as well as a
biographical summary of the experience of such persons for the past five years
or more, are set forth on Annex I attached hereto and are incorporated herein by
reference.
We and AIMCO are both subject to the information and reporting requirements
of the Exchange Act and, in accordance therewith, file reports and other
information with the Securities and Exchange Commission relating to our
business, financial condition and other matters. Such reports and other
information may be inspected at the public reference facilities maintained by
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Room of the SEC in Washington, D.C.
at prescribed rates. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
In addition, information filed by AIMCO with the New York Stock Exchange may be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
For more information regarding AIMCO Properties, L.P., please refer to the
Annual Report on Form 10-K for the year ended December 31, 1998 (particularly
the management's discussion and analysis of financial condition and results of
operations) and other reports and documents filed by it with the SEC.
Except for the acquisition of 990 Units on July 1, 1999 pursuant to a
previous tender offer at a price of $284 per unit, neither we nor, to the best
of our knowledge, any of the persons listed on Annex I attached hereto, (i)
beneficially own or have a right to acquire any units, (ii) have effected any
transaction in the units in the past 60 days, or (iii) have any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of your partnership, including, but not limited to, contracts,
arrangements, understandings or relationships concerning transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies
(except for previous tender offers we may have conducted for units).
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<PAGE>
Section 9. Background and Reasons for the Offer.
General. We are in the business of acquiring direct and indirect interests
in apartment properties such as the properties owned by your partnership. Our
offer provides us with an opportunity to increase our ownership interest in your
partnership's properties while providing you and other investors with an
opportunity to liquidate your current investment.
On October 28, 1997, Insignia Financial Group, Inc. ("Insignia") acquired
100% of the Class B stock of First Winthrop Corporation, the sole shareholder of
the General Partner. Pursuant to this transaction, the by-laws of the General
Partner were amended to provide for the creation of a Residential Committee.
Pursuant to the amended and restated by-laws, Insignia had the right to elect
one director to the General Partner's Board of Directors and to cause the
General Partner to take such actions as it deems necessary and advisable in
connection with the activities of the Partnership. On October 1, 1998, AIMCO
merged (the "Insignia Merger") with Insignia Financial Group, Inc. ("Insignia").
As a result of the Insignia Merger, AIMCO acquired the right to control the
Residential Committee. Through the Insignia Merger, AIMCO also acquired a
majority ownership interest in the entity that manages the properties owned by
your partnership. On October 31, 1998, IPT and AIMCO entered into an agreement
and plan of merger, dated as of October 1, 1998, pursuant to which IPT merged
with AIMCO on February 26, 1999 (the "IPT Merger"). Together with its
subsidiaries, AIMCO currently owns, in the aggregate, approximately 25.335% of
the outstanding limited partnership units of your partnership.
One of the reasons we chose to acquire Insignia is that we would be able to
make the tender offers to acquire limited partnership interests of some of the
limited partnerships formerly controlled or managed by Insignia (the "Insignia
Partnerships"). Such offers would provide liquidity for the limited partners of
the Insignia Partnerships, and would provide AIMCO Properties, L.P. with a
larger asset and capital base and increased diversification. As of the date of
this offering, AIMCO Properties, L.P. proposes to make offers to approximately
90 of the Insignia Partnerships, including your partnership.
During our negotiations with Insignia in early 1998, we decided that if the
merger with Insignia were consummated, we could also benefit from making offers
for limited partnership interests in the Insignia Partnerships. While some of
the Insignia Partnerships are public partnerships and information is publicly
available on such partnerships for weighing the benefits of making a tender
offer, many of the partnerships are private partnerships and information about
such partnerships comes principally from the general partner. Our control of the
general partner makes it possible to obtain access to such information. Further,
such control also means that we control the operations of the partnerships and
their properties. Insignia did not propose that we conduct such tender offers,
rather we initiated the offers on our own. We determined in June of 1998 that if
the merger with Insignia were consummated, we would offer to limited partners of
certain of the Insignia Partnerships limited partnership units of AIMCO
Properties, L.P. and/or cash.
Prior Tender Offers. On April 23, 1999, we commenced a tender offer which
closed on July 1, 1999 and pursuant to which we acquired 990 (representing
approximately 4.28% of the total outstanding units) at a cash purchase price of
$284 per unit. As a result of a number of limited partners inquiring as to their
rights to still sell their units, we decided to commence the current offer.
We are aware that tender offers may have been made by unaffiliated third
parties to acquire units in your partnership in exchange for cash. We are
unaware of the amounts offered, terms, tendering parties or number of units
involved in these tender offers. In connection with tender offers made by
Insignia affiliates with respect to partnerships for which we are making offers,
some limited partners filed lawsuits. We are not aware of any merger,
consolidation or other combination involving any of the Insignia Partnerships,
or any acquisitions of any of such partnerships or a material amount of the
assets of such partnerships.
Certain Litigation. On March 24, 1998, certain persons claiming to own
limited partner interests in certain of the limited partnerships for which our
subsidiaries act as general partner (including your partnership) filed a
purported class and derivative action in California Superior Court in the County
of San Mateo against AIMCO, Insignia, the general partners of the partnerships,
certain persons and entities who purportedly formerly controlled
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<PAGE>
the general partners, and additional entities affiliated with and individuals
who are officers, directors and/or principals of several of the defendants. The
complaint contains allegations that, among other things, (i) the defendants
breached fiduciary duties owed to the plaintiffs, or aided and abetted in those
purported breaches, by selling or agreeing to sell their "fiduciary positions"
as stockholders, officers and directors of the general partners for a profit and
retaining said profit rather than distributing it to the plaintiffs; (ii) the
defendants breached fiduciary duties, or aided and abetted in those purported
breaches, by mismanaging the partnerships and misappropriating assets of the
partnerships by (a) manipulating the operations of the partnerships to depress
the trading price of limited partnership units of the partnerships; (b) coercing
and fraudulently inducing unitholders to sell units to certain of the defendants
at depressed prices; and (c) using the voting control obtained by purchasing
units at depressed prices to entrench certain of the defendants' positions of
control over the partnerships; and (iii) the defendants breached their fiduciary
duties to the plaintiffs by (a) selling assets of the partnerships such as
mailing lists of unitholders and (b) causing the general partners to enter into
exclusive arrangements with their affiliates to sell goods and services to the
general partners, the unitholders and tenants of properties owned by the
partnerships. The complaint also alleges that the foregoing allegations
constitute violations of various California securities, corporate and
partnership statutes, as well as conversion and common law fraud. The complaint
seeks unspecified compensatory and punitive damages, an injunction blocking the
sale of control of the general partners and a court order directing the
defendants to discharge their fiduciary duties to the plaintiffs. On June 25,
1998, the defendants filed motions seeking dismissal of the action. In lieu of
responding to the motion, plaintiffs have filed an amended complaint. On October
14, 1998, the AIMCO and Insignia defendants filed demurrers to the amended
complaint. The demurrers (which are requests to dismiss the action as a matter
of law) were heard on February 8, 1999, but no decision has been reached by the
Court. While no assurances can be given, we believe that the ultimate outcome of
this litigation will not have a material adverse effect on us.
Alternatives Considered by Your General Partner. Before we commenced this
offer, your general partner (which is our affiliate) considered a number of
alternative transactions. The following is a brief discussion of the advantages
and disadvantages of the alternatives considered by your general partner.
Liquidation
One alternative would be for the partnership to sell its assets, distribute
the net liquidation proceeds to its partners in accordance with the agreement of
limited partnership, and thereafter dissolve. Partners would be at liberty to
use the net liquidation proceeds after taxes for investment, business, personal
or other purposes, at their option. If your partnership were to sell its assets
and liquidate, you and your partners would not need to rely upon capitalization
of income or other valuation methods to estimate the fair market value of
partnership assets. Instead, such assets would be valued through negotiations
with prospective purchasers (in many cases unrelated third parties).
However, in the opinion of your general partner (which is our affiliate),
the present time may not be the most desirable time to sell the residential real
estate assets of your partnership in a private transaction, and the proceeds
realized from any such sale would be uncertain. Your general partner believes it
currently is in the best interest of your partnership to continue holding its
residential real estate assets. Although there might be a prepayment penalty of
approximately 1 to 2% of the outstanding balance of the mortgages depending on
when and under what circumstances they are prepaid, such prepayment penalties
are not a significant factor in determining when a property may be sold. See
"The Offer - Section 13. Certain Information Concerning Your Partnership
Investment Objectives and Policies; Sale or Financing of Investments.
Continuation of the Partnership Without the Offer
A second alternative would be for your partnership to continue as a
separate legal entity, with its own assets and liabilities and continue to be
governed by its existing agreement of limited partnership, without our offer. A
number of advantages could result from the continued operation of your
partnership. Given improving rental market conditions, the level of
distributions might increase over time. It is possible that the private resale
market for properties could improve over time, making a sale of the
partnership's properties in a private transaction at some point in the future a
more attractive option than it is currently. The continuation of your
partnership will allow you to continue to participate in the net income and any
increases in revenue of your partnership and any net proceeds
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<PAGE>
from the sale of any property owned by your partnership. However, no assurance
can be given as to future operating results or as to the results of any attempts
to sell any property owned by your partnership.
There are several risks and disadvantages that result from continuing the
operations of your partnership without our offer. If your partnership were
continue operating as presently structured, your partnership could be forced to
borrow on terms that could result in net losses from operations. In addition,
continuation of your partnership without our offer would deny you and your
partners the benefits of our offer. For example, you would have no opportunity
for liquidity unless you were to sell your units in a private transaction. Any
such sale would likely be at a discount from your pro rata share of the fair
market value of the properties owned by your partnership.
Sale of Assets
Your partnership could sell the properties it owns and not liquidate. Your
general partner (which is our affiliate) considers the sale of partnership
properties from time to time. However, any such sale would likely be a taxable
transaction and, without a liquidating distribution, would not provide limited
partners with any cash to pay any tax liabilities arising as a result thereof.
Alternative Transactions Considered by Us. Before we decided to make our
offer, we considered a number of alternative transactions, including purchasing
some or all of your partnership's properties or merging your partnership with
us. However, both of these alternatives would require a vote of all the limited
partners. If the transaction was approved, all limited partners, including those
who wish to continue to participate in the ownership of your partnership's
properties, would be forced to participate in the transaction. If the
transaction was not approved, all limited partners, including those who would
like to dispose of their investment in your partnership's properties, would be
forced to retain their investment. We also considered an offer to exchange units
in your partnership for units of AIMCO Properties, L.P. However because of the
expense and delay associated with making such an exchange offer, we decided to
make an offer for cash only. In addition, our historical experience has been
that most holders of limited partnership units, when given a choice, prefer
cash.
Determination of Offer Price. In establishing the offer price, we reviewed
certain publicly available information and certain information made available to
us by the general partner (which is our affiliate) and our other affiliates,
including among other things: (i) the agreement of limited partnership, as
amended to date; (ii) the partnership's Annual Report on Form 10-KSB for the
year ended December 31, 1998; (iii) unaudited results of operations of the
partnership's properties for the period since the beginning of the partnership's
current fiscal year and to date in 1999; and (iv) the operating budgets prepared
by the property manager with respect to the partnership's properties for the
year ending December 31, 1999; and (v) tender offer statements,
solicitation/recommendation statements and beneficial ownership reports on
Schedules 14D-1, 14D-9 and 13D. Our determination of the offer price was based
on our review and analysis of the foregoing information, the other financial
information and the analyses concerning the partnership summarized below.
Valuation of Units. We determined our offer price by estimating the value
of each property owned by your partnership. For the properties, we used the
direct capitalization method. This method involves applying a capitalization
rate to your partnership's annual property income. A capitalization rate is a
percentage (rate of return), commonly applied by purchasers of residential real
estate to property income to determine the present value of income property. The
lower the capitalization rate utilized the higher the value produced, and the
higher the capitalization rate utilized the lower the value produced. We used
your partnership's property income for the fiscal year ended December 31, 1998.
Our method for selecting a capitalization rate begins with each property being
assigned a location and condition rating (e.g., "A" for excellent, "B" for good,
"C" for fair, and "D" for poor). We then adjust the capitalization rate based on
whether the mortgage debt that the property is subject to bears interest at a
rate above or below 7.5% per annum. Generally, for every 0.5% in excess of 7.5%,
the capitalization rate would be increased by 0.25% The evaluation of a
property's location and condition, and the determination of an appropriate
capitalization rate for a property, is subjective in nature, and others
evaluating the same property might use a different capitalization rate and
derive a different property value.
Property income is the difference between the revenues from the property
and related costs and expenses, excluding income derived from sources other than
its regular activities and before income deductions. Income
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deductions include interest, income taxes, prior-year adjustments, charges to
reserves, write-off of intangibles, adjustments arising from major changes in
accounting methods and other material and nonrecurring items. In this respect,
property income differs from net income disclosed in the partnership's financial
statements, which does not exclude these income sources and deductions. The
following is a reconciliation of your partnership's property income for the year
ended December 31, 1998, to your partnership's net operating income for the same
period.
Net (Loss) ($ 173,000)
Other Non-Operating Expense (304,000)
Depreciation 1,795,000
Interest 1,843,000
Property Income $3,161,000
Although the direct capitalization method is a widely accepted way of
valuing real estate, there are a number of other methods available to value real
estate, each of which may result in different valuations of a property. Further,
in applying the direct capitalization method, others may make different
assumptions and obtain different results. The proceeds that you would receive if
you sold your units to someone else or if your partnership were actually
liquidated might be higher than our offer price. We determined our offer price
as follows:
o First, we estimated the value of each property owned by your partnership.
We valued properties using the direct capitalization method. We selected
capitalization rates based on our experience in valuing similar properties.
The lower the capitalization rate applied to a property's income, the
higher its value. We considered local market sales information for
comparable properties, estimated actual capitalization rates (property
income less capital reserves divided by sales price) and then evaluated
each property in light of its relative competitive position, taking into
account property location, occupancy rate, overall property condition and
other relevant factors. We believe that arms-length purchasers would base
their purchase offers on capitalization rates comparable to those used by
us, however there is no single correct capitalization rate and others might
use different rates. We divided the fiscal 1998 property income by the
property's capitalization rate to derive an estimated gross property value
as described in the following table.
<TABLE>
<CAPTION>
Fiscal 1998 Estimated
Property Capitalization Gross Property
Property Income Rate Value
-------- ------ ---- -----
<S> <C> <C> <C>
Meadow Wood $ 698,000 11.25% $ 6,204,000
Stratford Place $ 1,315,000 11.00% $11,952,000
Stratford Village $ 542,000 10.50% $ 5,164,000
Sunflower $ 606,000 11.00% $ 5,509,000
-----------
Estimated Total Gross Property Value $28,829,000
</TABLE>
o Second, we calculated the value of the equity of your partnership by adding
to the aggregate gross property value of all properties owned by your
partnership, the value of the non-real estate assets of your partnership,
and deducting the liabilities of your partnership, including mortgage debt
and debt owed by your partnership to its general partner (which is our
affiliate) or its affiliates after consideration of any applicable
subordination provisions affecting payment of such debt. We deducted from
this value certain other costs including required capital expenditures,
deferred maintenance, and closing costs to derive a net equity value for
your partnership of $6,578,315. Closing costs, which are estimated to be
5.00% of the gross property value, include legal and accounting fees, real
property, transfer taxes, title and escrow costs and broker's fees.
o Third, using this net equity value, we determined the proceeds that would
be paid to holders of units in the event of a liquidation of your
partnership, based on the terms of your partnership's agreement of limited
partnership. Accordingly, 99.97% of the estimated liquidation proceeds are
assumed to be distributed to holders of units. Our offer price represents
the per unit liquidation proceeds determined in this manner.
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Gross valuation of partnership properties $ 28,829,000
Plus: Cash and cash equivalents 1,862,954
Plus: Other partnership assets, net of security deposits 1,497,044
Less: Mortgage debt, including accrued interest (21,282,061)
Less: Accounts payable and accrued expenses (153,159)
Less: Other liabilities (910,352)
------------
Partnership valuation before taxes and certain costs 9,843,426
Less: Disposition fees 0
Less: Extraordinary capital expenditures and deferred maintenance (2,400,241)
Less: Closing costs (864,870)
Estimates net valuation of your partnership 6,578,315
Percentage of estimated net valuation allocated to holders of units 99.97%
------------
Estimated net valuation of units 6,576,209
Total number of units 23,139
------------
Estimated valuation per unit $ 284
============
Cash consideration per unit $ $284
============
Comparison of Consideration to Alternative Consideration. To assist holders
of units in evaluating the offer, your general partner (which is our affiliate)
has attempted to compare the offer price against: (a) prices at which the units
have sold in the secondary market; (b) estimates of the value of the units on a
liquidation basis; and (c) an affiliate's estimate of net liquidation value. The
general partner of your partnership believes that analyzing the alternatives in
terms of estimated value, based upon currently available data and, where
appropriate, reasonable assumptions made in good faith, establishes a reasonable
framework for comparing alternatives. Since the value of the consideration for
alternatives to the offer is dependent upon varying market conditions, no
assurance can be given that the estimated values reflect the range of possible
values.
The results of these comparative analyses are summarized in the following
chart. You should bear in mind that the estimated values assigned to the
alternate forms of consideration are based on a variety of assumptions that have
been made by us. These assumptions relate to, among other things: the operating
results, if any, since December 31, 1998 as to income and expenses of each
property, other projected amounts and the capitalization rates that may be used
by prospective buyers if your partnership assets were to be liquidated.
In addition, these estimates are based upon certain information available
to your general partner (which is our affiliate) at the time the estimates were
computed, and no assurance can be given that the same conditions analyzed by it
in arriving at the estimates of value would exist at the time of the offer. The
assumptions used have been determined by the general partner of your partnership
in good faith, and, where appropriate, are based upon current and historical
information regarding your partnership and current real estate markets, and have
been highlighted below to the extent critical to the conclusions of the general
partner of your partnership. Actual results may vary from those set forth below
based on numerous factors, including interest rate fluctuations, tax law
changes, supply and demand for similar apartment properties, the manner in which
your partnership's properties are sold and changes in availability of capital to
finance acquisitions of apartment properties.
Under your partnership's agreement of limited partnership, the term of the
partnership will continue until December 31, 2003, unless sooner terminated as
provided in the agreement or by law. Limited partners could, as an alternative
to tendering their units, take a variety of possible actions, including voting
to liquidate the partnership or amending the agreement of limited partnership to
authorize limited partners to cause the partnership to merge with another entity
or engage in a "roll-up" or similar transaction.
Comparison Table
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Per Unit
--------
Cash offer price $284
Alternatives:
Estimated liquidation proceeds $284
Prices on Secondary Market
Secondary market sales information is not a reliable measure of value
because of the lack of any known trades. At present, privately negotiated sales
and sales through intermediaries are the only means which may be available to a
limited partner to liquidate an investment in units (other than our offer)
because the units are not listed or traded on any exchange or quoted on NASDAQ,
on the Electronic Bulletin Board, or on "pink sheets." Secondary sales activity
for the units, including privately negotiated sales, has been limited and
sporadic.
Although the general partner requests and sometimes receives information on
the prices at which units are sold, it does not regularly receive or maintain
information regarding the bid or asked quotations of secondary market makers, if
any. Set forth below are the high and low sale prices of units for the each
fiscal quarter from April 1, 1997 to March 31, 1999, as reported by The
Partnership Spectrum, which is an independent, third-party source. The gross
sales prices reported by The Partnership Spectrum do not necessarily reflect the
net sales proceeds received by sellers of units, which typically are reduced by
commissions and other secondary market transaction costs to amounts less than
the reported price. The Partnership Spectrum represents only one source of
secondary sales information, and other services may contain prices for the units
that equal or exceed sales prices reported in The Partnership Spectrum. We do
not know whether the information compiled by The Partnership Spectrum is
accurate or complete.
Reported Sales Prices of Partnership Units(1)
Low Sales Price High Sales Price
Per Unit Per Unit
-------- --------
Fiscal Year Ended December 31, 1999:
First Quarter $ -- $ --
Fiscal Year Ended December 31, 1998:
Fourth Quarter 305.00 300.00
Third Quarter 225.00 292.00
Second Quarter 225.00 320.00
First Quarter -- --
Fiscal Year Ended December 31, 1997:
Fourth Quarter -- --
Third Quarter 352.00 352.00
Second Quarter -- --
A tender offer for your units were made by us on April 23, 1999for $284 per
unit, which offer closed on July 1, 1999. See "The Offer - Section 9. Background
and Reasons for the Offer - Prior Tender Offers," in the Offer to Purchase.
Estimated Liquidation Proceeds
Liquidation value is a measure of the price at which the assets of your
partnership would sell if disposed of in an arms-length transaction between a
willing buyer and your partnership, each having access to relevant information
regarding the historical revenues and expenses of the business. Your general
partner (which is our affiliate) estimated the liquidation value of units using
the same direct capitalization method and assumptions as we did in valuing the
units for the offer price. The liquidation analysis also assumed that your
partnership's properties were sold to an independent third-party buyer at the
current property value and that other balance sheet assets
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(excluding amortizing assets) and liabilities of your partnership were sold at
their book value, and that the net proceeds of sale were allocated to your
partners in accordance with your partnership's agreement of limited partnership.
The liquidation analysis assumes that the assets of your partnership are
sold in a single transaction. Should the assets be liquidated over time, even at
prices equal to those projected, distributions to limited partners from cash
flow from operations might be reduced because your partnership's relatively
fixed costs, such as general and administrative expenses, are not
proportionately reduced with the liquidation of assets. However, for
simplification purposes, the sales of the assets are assumed to occur
concurrently. The liquidation analysis assumes that the assets would be disposed
of in an orderly manner and not sold in forced or distressed sales where sellers
might be expected to dispose of their interests at substantial discounts to
their actual fair market value.
Allocation of Consideration. We have allocated to the limited partners the
amount of the estimated net valuation of your partnership based on your
partnership's agreement of limited partnership as if your partnership was being
liquidated at the current time. In valuing your units, we have assumed that
99.97% of the estimated liquidation proceeds are distributed to holders of
units.
Section 10. Position of the General Partner of Your Partnership With Respect to
the Offer.
The general partner of your partnership believes the offer price and the
structure of the transaction are fair to the limited partners. In making such
determination, the general partner considered all of the factors and information
set forth below, but did not quantify or otherwise attach particular weight to
any such factors or information:
o The offer gives you an opportunity to make an individual decision on
whether to tender your units or to continue to hold them.
o Our offer price, and the method we used to determine our offer price.
o The fact that the price offered for your units is based on an
estimated value of your partnership's properties that has been
determined using a method believed to reflect the valuation of such
assets by buyers in the market for similar assets.
o Prices at which the units have recently sold, to the extent such
information is available.
o The absence of an established trading market for your units.
o An analysis of possible alternative transactions, including a property
sale or refinancing, or a liquidation of the partnership.
o An evaluation of the financial condition and results of operations of
your partnership including the decrease in property income of your
partnership from $3,249,000 for the year ended December 31, 1997 to
$3,161,000 for the year ended December 31, 1998.
The general partner of your partnership makes no recommendation as to
whether you should tender or refrain from tendering your units. Although the
general partner believes the offer is fair, you must make your own decision
whether or not to participate in the offer, based upon a number of factors,
including your financial position, your need or desire for liquidity, other
financial opportunities available to you, and your tax position and the tax
consequences to you of selling your units.
Section 11. Conflicts of Interest and Transactions with Affiliates.
Conflicts of Interest With Respect to the Offer. The general partner of
your partnership became controlled by AIMCO on October 1, 1998, when AIMCO
merged with Insignia. Accordingly, the general partner of
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<PAGE>
your partnership has substantial conflicts of interest with respect to the
offer. The general partner of your partnership has a fiduciary obligation to
obtain a fair offer price for you, even as an affiliate of AIMCO. It also has a
duty to remove the property manager for your partnership's properties, under
certain circumstances, even though the property manager is also an affiliate of
AIMCO. The conflicts of interest include: (1) the fact that a decision to
remove, for any reason, the general partner of your partnership from its current
position as a general partner of your partnership would result in a decrease or
elimination of the substantial management fees paid to an affiliate of the
general partner of your partnership for managing your partnership's properties;
and (2) as a consequence of our ownership of units, because we may have
incentives to seek to maximize the value of our ownership of units, which in
turn may result in a conflict for your general partner in attempting to
reconcile our interests with the interests of the other limited partners.
Additionally, we desire to purchase units at a low price and you desire to sell
units at a high price. The general partner of your partnership makes no
recommendation as to whether you should tender or refrain from tendering your
units. Such conflicts of interest in connection with the offer and the operation
of AIMCO differ from those conflicts of interest that currently exist for your
partnership. See "Risk Factors -- Conflicts of Interest With Respect to the
Offer." Your general partner has filed a Solicitation/Recommendation Statement
on Schedule 14D-9 with the SEC, which indicates that it is remaining neutral and
making no recommendation as to whether limited partners should tender their
units pursuant to the offer. Limited partners are urged to read this offer to
purchase and the Schedule 14D-9 and the related materials carefully and in their
entirety before deciding whether to tender their units.
Conflicts of Interest That Currently Exist for Your Partnership. We control
both the general partner of your partnership and the manager of your
partnership's properties. The general partner does receive an annual management
fee and may receive reimbursements for expenses incurred in its capacity as
general partner. The general partner of your partnership received total fees and
reimbursements of $90,000 in 1996, $86,000 in 1997 and $76,000 in 1998. The
reimbursement amount to your general partner for the 1998 fiscal year included
$17,000 which was paid to an affiliate of your general partner for costs
incurred in connection with construction oversight services. The property
manager received management fees of $335,000 in 1996, $345,000 in 1997 and
$362,000 in 1998. We have no current intention of changing the fee structure for
your general partner or the manager of your partnership's properties.
Competition Among Properties. Because AIMCO and your partnership both
invest in apartment properties, these properties may compete with one another
for tenants. Furthermore, you should bear in mind that AIMCO may acquire
properties in general market areas where your partnership properties are
located. It is believed that this concentration of properties in a general
market area will facilitate overall operations through collective advertising
efforts and other operational efficiencies. In managing AIMCO's properties, we
will attempt to reduce such conflicts between competing properties by referring
prospective customers to the property considered to be most conveniently located
for the customer's needs.
Future Offers. Although we have no current plans to conduct future tender
offers for your units, our plans may change based on future circumstances. Any
such future offers that we might make could be for consideration that is more or
less than the consideration we are currently offering.
Section 12. Future Plans of the Purchaser.
As described above under "The Offer - Section 9. Background and Reasons for
the Offer," we own the general partner and thereby control the management of
your partnership. In addition, we own the manager of your partnership's
properties. We currently intend that, upon consummation of the offer, your
partnership will continue its business and operations substantially as they are
currently being conducted. The offer is not expected to have any effect on
partnership operations.
Although we have no present intention to do so, we may acquire additional
units or sell units after completion or termination of the offer. Any
acquisition may be made through private purchases, through one or more future
tender or exchange offers, by merger, consolidation or by any other means deemed
advisable. Any acquisition may be at a price higher or lower than the price to
be paid for the units purchased pursuant to this offer, and may be for cash,
limited partnership interests in AIMCO Properties, L.P. or other consideration.
We also may consider selling some or all of the units we acquire pursuant to the
offer to persons not yet determined, which may
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<PAGE>
include our affiliates. We may also buy your partnership's properties, although
we have no present intention to do so. There can be no assurance, however, that
we will initiate or complete, or will cause your partnership to initiate or
complete, any subsequent transaction during any specific time period following
the expiration of the offer or at all.
Except as set forth herein, we do not have any present plans or proposals
which relate to or would result in an extraordinary transaction, such as a
merger, reorganization or liquidation, involving your partnership or any of your
partnership's subsidiaries; a sale or transfer of a material amount of your
partnership's assets (or assets of the partnership's subsidiaries); any changes
in composition of your partnership's senior management or personnel or their
compensation; any changes in your partnership's present capitalization or
distribution policy; or any other material changes in your partnership's
structure or business. However, we expect that consistent with your general
partner's fiduciary obligations, the general partner will seek and review
opportunities (including opportunities identified by us) to engage in
transactions which could benefit your partnership, such as sales or refinancings
of assets or a combination of the partnership with one or more other entities,
with the objective of seeking to maximize returns to limited partners.
We have been advised that the possible future transactions the general
partner expects to consider on behalf of your partnership include: (1) payment
of extraordinary distributions; (2) refinancing, reducing or increasing existing
indebtedness of the partnership; (3) sales of assets, individually or as part of
a complete liquidation; and (4) mergers or other consolidation transactions
involving the partnership. Any such merger or consolidation transaction could
involve other limited partnerships in which your general partner or its
affiliates serve as general partners, or a combination of the partnership with
one or more existing, publicly traded entities (including, possibly, affiliates
of AIMCO), in any of which limited partners might receive cash, common stock or
other securities or consideration. There is no assurance, however, as to when or
whether any of the transactions referred to above might occur. If any such
transaction is effected by the partnership and financial benefits accrue to the
limited partners of your partnership, we will participate in those benefits to
the extent of our ownership of units. The agreement of limited partnership
prohibits limited partners from voting on actions taken by the partnership,
unless otherwise specifically permitted therein. Limited partners may vote on a
liquidation, and if we are successful in acquiring a substantial number of units
pursuant to the offer, we will be able to control the outcome of any such vote.
Even if we acquire a lesser number of units pursuant to the offer, however,
because we currently own approximately 25.335% of the outstanding units we will
be able to significantly influence the outcome of any such vote. Our primary
objective in seeking to acquire the units pursuant to the offer is not, however,
to influence the vote on any particular transaction, but rather to generate a
profit on the investment represented by those units.
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<PAGE>
Section 13. Certain Information Concerning Your Partnership.
General. Winthrop Growth Investors I Limited Partnership was organized on
June 20, 1983, under the laws of the State of Massachusetts. Its primary
business is real estate ownership and related operations. Your partnership was
formed for the purpose of making investments in various types of real properties
which offer potential capital appreciation and cash distributions to its limited
partners.
Your partnership's investment portfolio currently consists of the following
four residential apartment complexes below:
<TABLE>
<CAPTION>
Property Date of Purchase Type of Ownership Size
-------- ---------------- ----------------- ----
<S> <C> <C> <C>
Sunflower Apartments 08/84 Fee ownership subject Apartment
Dallas, Texas to a first mortgage 248 units
Meadow Wood Apartments 12/84 Fee ownership subject Apartment
Jacksonville, Florida to a first mortgage 356 units
Stratford Place Apartments 12/85 Fee ownership subject Apartment
Gaithersburg, Maryland to a first mortgage 350 units
Stratford Village 02/86 Fee ownership subject Apartment
Montgomery, Alabama to a first mortgage 224 units
</TABLE>
The general partner of your partnership is Two Winthrop Properties, Inc.
AIMCO has the right, through to its control of your general partner's
residential committee, to control you're the day to day activities of your
partnership. A wholly owned subsidiary of AIMCO serves as manager of the
properties owned by your partnership. As of December 31, 1998, there were 23,139
units issued and outstanding, which were held of record by 1,028 limited
partners. Your partnership's principal executive offices are located at 1873
South Bellaire Street, 17th Floor, Denver, Colorado 80222, and its telephone
number at that address is (303) 757-8101.
For additional information about your partnership, please refer to the
annual report prepared by your partnership which was sent to you prior to this
offer to purchase, particularly Item 2 of Form 10-KSB which contains detailed
information regarding the properties owned, including mortgages, rental rates
and taxes.
Investment Objectives and Policies; Sale or Financing of Investments. In
general, your general partner (which is our affiliate) regularly evaluates the
partnership's properties by considering various factors, such as the
partnership's financial position and real estate and capital markets conditions.
The general partner monitors the properties' specific locale and sub-market
conditions (including stability of the surrounding neighborhood) evaluating
current trends, competition, new construction and economic changes. The general
partner oversees each asset's operating performance and continuously evaluates
the physical improvement requirements. In addition, the financing structure for
each property (including any prepayment penalties), tax implications,
availability of attractive mortgage financing to a purchaser, and the investment
climate are all considered. Any of these factors, and possibly others, could
potentially contribute to any decision by the general partner to sell,
refinance, upgrade with capital improvements or hold a particular partnership
property. If rental market conditions improve, the level of distributions might
increase over time. It is possible that the private resale market for properties
could improve over time, making a sale of the partnership's properties in a
private transaction at some point in the future a more viable option than it is
currently. After taking into account the foregoing considerations, your general
partner is not currently seeking a sale of your partnership's properties
primarily because it expects the properties' operating performance to improve in
the near term. In making this assessment, your general partner noted the
occupancy and rental rates at the properties in 1998 compared to 1997. For more
detailed information regarding the average occupancy and rental rates, see
"Average Annual Rental Rates and Occupancy" below. In particular, the general
partner noted that it has budgeted approximately $1,968,000 for capital
improvements at the properties in 1999 to repair and update the properties',
which capital improvements consist of carpet replacement, building improvements,
landscaping upgrades and
23
<PAGE>
parking lot repairs.. Although there can be no assurance as to future
performance, however, these expenditures are expected to improve the
desirability of the property to tenants. The general partner does not believe
that a sale of the properties at the present time would adequately reflect the
properties' future prospects. Another significant factor considered by your
general partner is the likely tax consequences of a sale of the properties for
cash. Such a transaction would likely result in tax liabilities for many limited
partners. The general partner has not received any recent indication of interest
or offer to purchase the properties.
Originally Anticipated Term of Partnership. Your partnership's prospectus,
dated May 11, 1984, pursuant to which units in your partnership were sold,
indicated that your partnership was intended to be self-liquidating and that it
was anticipated that the partnership's properties would be sold within prior to
its dissolution date. The prospectus also indicated that there could be no
assurance that the partnership would be able to so liquidate and that, unless
sooner terminated as provided in the partnership agreement, the existence of the
partnership would continue until the year 2003. The partnership currently owns
four apartment properties. Your general partner (which is our affiliate)
continually considers whether a property should be sold or otherwise disposed of
after consideration of relevant factors, including prevailing economic
conditions, availability of favorable financing and tax considerations, with a
view to achieving maximum capital appreciation for your partnership. We cannot
predict when any of the properties will be sold or otherwise disposed of.
However, there is no current plan or intention to sell the properties in the
near future.
Under your partnership's agreement of limited partnership, the term of the
partnership will continue until December 31, 2003, unless sooner terminated as
provided in the agreement or by law. Limited partners could, as an alternative
to tendering their units, take a variety of possible actions, including voting
to liquidate the partnership or amending the agreement of limited partnership to
authorize limited partners to cause the partnership to merge with another entity
or engage in a "roll-up" or similar transaction.
Capital Replacement. Your partnership has an ongoing program of capital
improvements, replacements and renovations, including roof replacements, kitchen
and bath renovations, balcony repairs (where applicable), replacement of various
building systems and other replacements and renovations in the ordinary course
of business. All capital improvement and renovation costs are expected to be
paid from operating cash flows, cash reserves, or from short-term or long-term
borrowings.
Competition. There are other properties within the market area of your
partnership's properties. The number and quality of competitive properties in
such an area could have a material effect on the rental market for the
apartments at your partnership's properties and the rents that may be charged
for such apartments. While we are a significant factor in the United States in
the apartment industry, competition for apartments is local. According to data
published by the National Multi-Housing Council, as of January 1, 1999, our
portfolio of 373,409 owned or managed apartment units represents approximately
2.2% of the national stock of rental apartments in structures with at least five
apartments.
Selected Financial and Property-Related Data. The summary financial
information of your partnership for the years ended December 1998 and 1997 is
based on audited financial statements. The summary financial information for the
three months ended March 31, 1999 and 1998 is based on unaudited financial
statements. This information should be read in conjunction with such financial
statements, including notes thereto, and "Management's Discussion and Analysis
of Financial Condition and Results of Operations of Your Partnership" in the
Annual Report on Form 10-KSB of your partnership for the year ended December 31,
1998.
24
<PAGE>
<TABLE>
<CAPTION>
For the For the
Three Months Ended Year Ended
March 31, December 31,
-------- -----------
1999 1998 1998 1997
---- ---- ---- ----
(in thousands, except per unit data)
<S> <C> <C> <C> <C>
Operating Data:
Total Revenues $ 1,885 $ 1,776 $ 7,278 $ 7,151
Net Income (Loss) 100 (44) (173) (291)
Net Income (Loss) per limited 3.89 (1.73) (6.74) (11.32)
partnership unit
March 31, December 31,
--------- ------------
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and Cash Equivalents $ 1,495 $ 1,708 $ 1,863 $ 1,508
Real Estate, Net of Accumulated 21,183 21,449 21,394 21,825
Depreciation
Total Assets 25,474 26,181 25,952 26,287
Notes Payable 21,014 21,270 21,080 21,331
General Partners' Capital (Deficit) (1,265) (1,262) (1,275) (1,258)
Limited Partners' Capital (Deficit) 4,710 5,436 4,620 5,476
Partners' Capital (Deficit) 3,445 4,174 3,345 4,218
Total Distributions (600) -- (100) (200)
Net increase (decrease) in cash and (368) 200 355 160
cash equivalents
Net cash provided by operating activities 435 401 1,745 1,412
</TABLE>
Accumulated Depreciation Schedule. The following shows the gross carrying
value, accumulated depreciation and federal tax basis of each of your
partnership's properties as of December 31, 1998.
<TABLE>
<CAPTION>
Gross Carrying Accumulated
Property Value Depreciation Rate Method Federal Tax Basis
- -------- ----- ------------ ---- ------ -----------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Sunflower $ 8,778 $ 5,922 5-25 yrs S/L --
Meadow Wood 12,166 5,992 5-25 yrs S/L --
Stratford Place 14,885 7,002 5-25 yrs S/L --
Stratford Village 8,972 4,491 5-25 yrs S/L --
------- -------
Total $44,801 $23,407 --
======= =======
</TABLE>
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<PAGE>
Schedule of Mortgages. The following shows certain information regarding
the outstanding mortgages encumbering each of your partnership's properties as
of December 31, 1998.
<TABLE>
<CAPTION>
Principal
Principal Stated Balance
Balance At Interest Period Maturity Due At
Property December 31, 1998 Rate Amortized Date Maturity
-------- ----------------- ---- --------- ---- --------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Sunflower $ 2,624 7.46% 360 mos. 02/11/26 $ 19
Meadow Wood 4,134 10.00% (1) 12/01/00 4,071
Stratford Place 9,193 8.23% (1) 07/01/06 8,000
Stratford Village 5,129 7.72% 360 mos. 11/01/24 38
---------- ----------
================ ================
$ 21,080 $ 12,128
========== ==========
================ ================
</TABLE>
Average Annual Rental Rate and Occupancy. The following shows the average
annual rental rates and occupancy percentages for each of your partnership's
properties during the past two years.
<TABLE>
<CAPTION>
Property Average Annual Rental Rate Average Annual Occupancy
-------- -------------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sunflower $5,585 $5,317 98% 96%
Meadow Wood 6,377 6,119 86% 86%
Stratford Place 7,625 7,311 97% 97%
Stratford Village 6,788 6,801 84% 90%
</TABLE>
Schedule of Real Estate Taxes and Rates. The following shows the real
estate taxes and rates for 1998 for each of your partnership's properties.
1998 Billing
------------
Property (in thousands 1998 Rate
-------- ---------
Sunflower $132 2.71%
Meadow Wood 150 2.04%
Stratford Place 210 3.32%
Stratford Village 59 3.45%
Property Management. Your partnership's properties are managed by an entity
which is a wholly owned subsidiary of AIMCO. Pursuant to the management
agreement between the property manager and your partnership, the property
manager operates your partnership's properties, establishes rental policies and
rates and directs marketing activities. The property manager also is responsible
for maintenance, the purchase of equipment and supplies, and the selection and
engagement of all vendors, suppliers and independent contractors.
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<PAGE>
Distributions. The following table shows, for each of the years indicated,
the distributions paid per unit in such years.
Year Ended December 31 Amount
---------------------- -------
1995 $ 8.64
1996 $ 8.64
1997 $ 8.64
1998 $30.25
Total $56.17
Operating Budgets of the Partnership. A summary of the operating budgets of
your partnership's properties for the year ending on December 31, 1999 is as
follows:
<TABLE>
<CAPTION>
Fiscal 1999 Operating Budgets
Meadow Wood Stratford Place Stratford Village Sunflower
<S> <C> <C> <C> <C>
Total Revenues $ 2,033,494 $ 2,804,111 $ 1,318,695 $ 1,427,384
Operating Expenses (502,019) (488,501) (277,675) (264,328)
Replacement Reserves-Net 71,196 84,000 32,712 53,700
Debt Service (443,592) (897,310) (458,323) (225,658)
Capital Expenditures (1,032,032) (664,500) (180,974) (307,298)
Net Cash Flow 127,047 837,800 434,435 683,800
</TABLE>
The above budgets at the time they were made were forward-looking
information developed by your general partner (which is our affiliate).
Therefore, the budgets were dependent upon future events with respect to the
ability of your partnership to meet such budget. The budgets incorporated
various assumptions including, but not limited to, lease revenue (including
occupancy rates), various operating expenses, general and administrative
expenses, depreciation expenses, capital expenditures, and working capital
levels. While we deemed such budgets to be reasonable and valid at the date
made, there is no assurance that the assumed facts will be validated or that the
circumstances will actually occur. Any estimate of the future performance of a
business, such as your partnership's business, is forward-looking and based on
assumptions some of which inevitably will prove to be incorrect.
The budget amounts provided above are figures that were not computed in
accordance with GAAP. In particular, items that are categorized as capital
expenditures for purposes of preparing the operating budget are often
re-categorized as expenses when the financial statements are audited and
presented in accordance with GAAP. Therefore, the summary operating budget
presented for fiscal 1999 should not necessarily be considered as indicative of
what the audited operating results for fiscal 1999 will be. For the year ended
December 31, 1998, the partnership reported revenues of $7,241,257, operating
expenses of $3,727,084 and replacement reserves and capital expenditures of
$353,000.
Beneficial Ownership of Interests in Your Partnership. Together with its
subsidiaries, we currently own, in the aggregate, approximately 25.335% of the
outstanding limited partnership units of your partnership. Except as set forth
above, neither we, nor, to the best of our knowledge, any of our affiliates, (i)
beneficially own or have a right to acquire any units, (ii) have effected any
transactions in the units in the past 60 days, or (iii) have any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of your partnership, including, but not limited to, contracts,
arrangements, understandings or relationships concerning transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
27
<PAGE>
Compensation Paid to the General Partner and its Affiliates. The following
table shows, for each of the years indicated, compensation paid to your general
partner and its affiliates:
Partnership Property
Fees and Management
Year Expenses Fees
---- ----------- ----------
1996 $ 90,000 $335,000
1997 86,000 345,000
1998 76,000 362,000
Legal Proceedings. Your partnership may be party to a variety of legal
proceedings related to its ownership of the partnership's properties and
management and leasing business, respectively, arising in the ordinary course of
the business, which are not expected to have a material adverse effect on your
partnership.
Additional Information Concerning Your Partnership. Your partnership files
annual, quarterly and special reports, proxy statements and other information
with the SEC. You may read and copy any document your partnership files at the
SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Your partnership's SEC filings are also available
to the public at the SEC's web site at http://www.sec.gov.
Section 14. Voting Power.
Decisions with respect to the day-to-day management of your partnership are
the responsibility of the general partner. Because the general partner of your
partnership is our affiliate, we control the management of your partnership.
Under your partnership's agreement of limited partnership, limited partners
holding a majority of the outstanding units must approve certain extraordinary
transactions, including the removal of the general partner, the addition of a
new general partner, most amendments to the partnership agreement and the sale
of all or substantially all of your partnership's assets. If we acquire all the
units we are offering to purchase, we will own a majority of the outstanding
units and will have the ability to control any vote of the limited partners.
Section 15. Source of Funds.
We expect that approximately $2,960,700 will be required to purchase all of
the 10,425 limited partnership units that we are seeking in this offer
(exclusive of fees and expenses estimated to be $10,000). For more information
regarding fees and expenses, see "The Offer - Section 19. Fees and Expenses" in
the Offer to Purchase.
In addition to this offer, we are concurrently making offers to acquire
interests in approximately 100 other limited partnerships. If all such offers
were fully subscribed for cash, we would be required to pay approximately $260
million for all such units. If for some reason we did not have such funds
available we might extend this offer for a period of time sufficient for us to
obtain additional funds, or we might terminate this offer. However, based on our
past experience with similar offers, we do not expect all such offers to be
fully subscribed. Also, in some offers, investors have been offered a choice of
cash or securities. As a result, we expect that the funds that will be necessary
to consummate all the offers will be substantially less than $200 million. We
believe that we have sufficient cash on hand and available sources of financing
to pay such amounts. As of March 31, 1999, we had $38,000,000 of cash on hand
and $145,000,000 available for borrowing under our existing lines of credit.
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<PAGE>
Under our $145 million revolving credit facility with Bank of America
National Trust and Savings Association ("Bank of America") and BankBoston, N.A.,
AIMCO Properties, L.P. is the borrower and all obligations thereunder are
guaranteed by AIMCO and certain of its subsidiaries. The annual interest rate
under the credit facility is based on either LIBOR or Bank of America's
reference rate, at our election, plus, an applicable margin. We elect which
interest rate will be applicable to particular borrowings under the credit
facility. The margin ranges between 2.25% and 2.75% in the case of LIBOR-based
loans and between 0.75% and 1.25% in the case of base rate loans, depending upon
a ratio of our consolidated unsecured indebtedness to the value of certain
unencumbered assets. The credit facility matures on September 30, 1999 unless
extended, at the discretion of the lenders. The credit facility provides for the
conversion of the revolving facility into a three year term loan. The
availability of funds to us under the credit facility is subject to certain
borrowing base restrictions and other customary restrictions, including
compliance with financial and other covenants thereunder. The financial
covenants require us to maintain a ratio of debt to gross asset value of no more
than 0.55 to 1.0, an interest coverage ratio of 2.25 to 1.0 and a fixed charge
coverage ratio of at least 1.7 to 1.0 from January 1, 1999 through June 30,
1999, and 1.8 to 1.0 thereafter. In addition, the credit facility limits us from
distributing more than 80% of our Funds From Operations (as defined) to holders
of our units, imposes minimum net worth requirements and provides other
financial covenants related to certain unencumbered assets.
Section 16. Dissenters' Rights.
Neither the agreement of limited partnership of your partnership nor
applicable law provides any right for you to have your units appraised or
redeemed in connection with, or as a result of, our offer. You have the
opportunity to make an individual decision on whether or not to tender your
units in the offer.
Section 17. Conditions of the Offer.
Notwithstanding any other provisions of our offer, we will not be required
to accept for payment and pay for any units tendered pursuant to our offer, may
postpone the purchase of, and payment for, units tendered, and may terminate or
amend our offer if at any time on or after the date of this offer to purchase,
and at or before the expiration of our offer (including any extension thereof),
any of the following shall occur:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, indebtedness, capitalization, condition
(financial or otherwise), operations, licenses or franchises, management
contract, or results of operations or prospects of your partnership or local
markets in which your partnership owns property, including any fire, flood,
natural disaster, casualty loss, or act of God that, in our reasonable judgment,
are or may be materially adverse to your partnership or the value of the units
to us, or we shall have become aware of any facts relating to your partnership,
its indebtedness or its operations which, in our reasonable judgment, has or may
have material significance with respect to the value of your partnership or the
value of the units to us; or
(b) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or the
over-the-counter market in the United States, (ii) a decline in the closing
price of a share of AIMCO's Class A Common Stock of more than 7.5% from the date
hereof, (iii) any extraordinary or material adverse change in the financial,
real estate or money markets or major equity security indices in the United
States such that there shall have occurred at least a 25 basis point increase in
30 day LIBOR or at least a 7.5% decrease in the S&P 500 Index, the Morgan
Stanley REIT Index, or at least a 25 basis point increase the price of the
10-year Treasury Bond or the 30-year Treasury Bond, in each case from the date
hereof, (iii) any material adverse change in the commercial mortgage financing
markets, (iv) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (vi) a commencement of a war,
conflict, armed hostilities or other national or international calamity directly
or indirectly involving the United States, (vii) any limitation (whether or not
mandatory) by any governmental authority on, or any other event which, in our
reasonable judgment, might affect the extension of credit by banks or other
lending institutions, or (viii) in the case of any of the foregoing existing at
the time of the commencement of the offer, in our reasonable judgment, a
material acceleration or worsening thereof; or
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<PAGE>
(c) there shall have been threatened, instituted or pending any action,
proceeding, application or counterclaim by any Federal, state, local or foreign
government, governmental authority or governmental agency, or by any other
person, before any governmental authority, court or regulatory or administrative
agency, authority or tribunal, which (i) challenges or seeks to challenge our
purchase of the units, restrains, prohibits or delays the making or consummation
of our offer, prohibits the performance of any of the contracts or other
arrangements entered into by us (or any affiliates of ours), seeks to obtain any
material amount of damages as a result of the transactions contemplated by our
offer, (ii) seeks to make the purchase of, or payment for, some or all of the
units pursuant to our offer illegal or results in a delay in our ability to
accept for payment or pay for some or all of the units, (iii) seeks to prohibit
or limit the ownership or operation by us or any of our affiliates of the entity
serving as general partner of the partnership or to remove such entity as
general partner of your partnership, or seeks to impose any material limitation
on our ability or the ability of any affiliate of ours to conduct your
partnership's business or own such assets, (iv) seeks to impose material
limitations on our ability to acquire or hold or to exercise full rights of
ownership of the units including, but not limited to, the right to vote the
units purchased by us on all matters properly presented to the limited partners,
or (v) might result, in our reasonable judgment, in a diminution in the value of
your partnership or a limitation of the benefits expected to be derived by us as
a result of the transactions contemplated by our offer or the value of the units
to us; or
(d) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall be sought, proposed, enacted, promulgated, entered,
enforced or deemed applicable to our offer, your partnership, any general
partner of your partnership, us or any affiliate of ours or your partnership, or
any other action shall have been taken, proposed or threatened, by any
government, governmental authority or court, that, in our reasonable judgment,
might, directly or indirectly, result in any of the consequences referred to in
clauses (i) through (vi) of paragraph (c) above; or
(e) your partnership shall have (i) changed, or authorized a change of, the
units or your partnership's capitalization, (ii) issued, distributed, sold or
pledged, or authorized, proposed or announced the issuance, distribution, sale
or pledge of (A) any equity interests (including, without limitation, units), or
securities convertible into any such equity interests or any rights, warrants or
options to acquire any such equity interests or convertible securities, or (B)
any other securities in respect of, in lieu of, or in substitution for units
outstanding on the date hereof, (iii) purchased or otherwise acquired, or
proposed or offered to purchase or otherwise acquire, any outstanding units or
other securities, (iv) declared or paid any dividend or distribution on any
units or issued, authorized, recommended or proposed the issuance of any other
distribution in respect of the units, whether payable in cash, securities or
other property, (v) authorized, recommended, proposed or announced an agreement,
or intention to enter into an agreement, with respect to any merger,
consolidation, liquidation or business combination, any acquisition or
disposition of a material amount of assets or securities, or any release or
relinquishment of any material contract rights, or any comparable event, not in
the ordinary course of business, (vi) taken any action to implement such a
transaction previously authorized, recommended, proposed or publicly announced,
(vii) issued, or announced its intention to issue, any debt securities, or
securities convertible into, or rights, warrants or options to acquire, any debt
securities, or incurred, or announced its intention to incur, any debt other
than in the ordinary course of business and consistent with past practice,
(viii) authorized, recommended or proposed, or entered into, any transaction
which, in our reasonable judgment, has or could have an adverse affect on the
value of your partnership or the units, (ix) proposed, adopted or authorized any
amendment of its organizational documents, (x) agreed in writing or otherwise to
take any of the foregoing actions or (xi) been notified that any debt of your
partnership or any of its subsidiaries secured by any of its or their assets is
in default or has been accelerated; or
(f) a tender or exchange offer for any units shall have been commenced or
publicly proposed to be made by another person or "group" (as defined in Section
13(d)(3) of the Exchange Act), or it shall have been publicly disclosed or we
shall have otherwise learned that (i) any person or group shall have acquired or
proposed or be attempting to acquire beneficial ownership of more than five
percent of the units, or shall have been granted any option, warrant or right,
conditional or otherwise, to acquire beneficial ownership of more than five
percent of the units, other than acquisitions for bona fide arbitrage purposes,
or (ii) any person or group shall have entered into a definitive agreement or an
agreement in principle or made a proposal with respect to a merger,
consolidation or other business combination with or involving your partnership;
or
30
<PAGE>
(g) we shall not have adequate cash or financing commitments available to
pay the for the units validly tendered; or
(h) the offer to purchase may have an adverse effect on AIMCO's status as a
REIT.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to such conditions or may be waived
by us in whole or in part at any time and from time to time in our reasonable
discretion. The failure by us at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to any particular facts or circumstances shall not be deemed
a waiver with respect to any other facts or circumstances and each right shall
be deemed a continuing right which may be asserted at any time and from time to
time.
Section 18. Certain Legal Matters.
General. Except as set forth in this Section 18, we are not, based on
information provided by your general partner (which is our affiliate), aware of
any licenses or regulatory permits that would be material to the business of
your partnership, taken as a whole, and that might be adversely affected by our
acquisition of units as contemplated herein, or any filings, approvals or other
actions by or with any domestic or foreign governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of units by us pursuant to the offer, other than the filing of a
Tender Offer Statement on Schedule 14D-1 with the SEC (which has already been
filed) and any required amendments thereto. While there is no present intent to
delay the purchase of units tendered pursuant to the offer pending receipt of
any such additional approval or the taking of any such action, there can be no
assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to your partnership or its business, or that certain parts of its
business might not have to be disposed of or other substantial conditions
complied with in order to obtain such approval or action, any of which could
cause us to elect to terminate the offer without purchasing units thereunder.
Our obligation to purchase and pay for units is subject to certain conditions,
including conditions related to the legal matters discussed in this Section 18.
Antitrust. We do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of units
contemplated by our offer.
Margin Requirements. The units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to our offer.
State Laws. We are not aware of any jurisdiction in which the making of our
offer is not in compliance with applicable law. If we become aware of any
jurisdiction in which the making of the offer would not be in compliance with
applicable law, we will make a good faith effort to comply with any such law.
If, after such good faith effort, we cannot comply with any such law, the offer
will not be made to (nor will tenders be accepted from or on behalf of)
unitholders residing in such jurisdiction. In those jurisdictions with
securities or blue sky laws that require the offer to be made by a licensed
broker or dealer, the offer shall be made on behalf of us, if at all, only by
one or more registered brokers or dealers licensed under the laws of that
jurisdiction.
Section 19. Fees and Expenses.
Except as set forth in this Section 19, we will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
units pursuant to the offer. We have retained River Oaks Partnership Services,
Inc. to act as Information Agent in connection with our offer. The Information
Agent may contact holders of units by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers and other nominee limited
partners to forward materials relating to the offer to beneficial owners of the
units. We will pay the Information Agent reasonable and customary compensation
for its services in connection with the offer, plus reimbursement for
out-of-pocket expenses, and will indemnify it against certain liabilities and
expenses in connection therewith, including liabilities under the Federal
securities laws. We will also pay all costs and expenses of printing and mailing
the offer and its legal fees and expenses.
31
<PAGE>
----------
No person has been authorized to give any information or to make any
representation on behalf of us not contained herein or in the letter of
transmittal and, if given or made, such information or representation must not
be relied upon as having been authorized.
We have filed with the Commission a Tender Offer Statement on Schedule
14D-1, pursuant to Section 14(d)(1) and Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to our offer, and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected and copies may be obtained at the same
place and in the same manner as described in "The Offer -- Section 13" under
"Additional Information Concerning Your Partnership."
AIMCO PROPERTIES, L.P.
32
<PAGE>
ANNEX I
OFFICERS AND DIRECTORS
The names and positions of the executive officers of Apartment Investment
and Management Company ("AIMCO"), AIMCO-GP, Inc. ("AIMCO-GP") and the directors
of AIMCO are set forth below. The two directors of AIMCO-GP are Terry Considine
and Peter Kompaniez. The Class B Director of the general partner of your
partnership is Patrick J. Foye. Mr. Foye and Carla R. Stoner are the officers of
the general partner of your partnership elected by the Residential Committee.
Unless otherwise indicated, the business address of each executive officer and
director is 1873 South Bellaire Street, 17th Floor, Denver, Colorado 80222. Each
executive officer and director is a citizen of the United States of America.
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Terry Considine Chairman of the Board of Directors and Chief Executive Officer
Peter K. Kompaniez Vice Chairman, President and Director
Thomas W. Toomey Executive Vice President-- Finance and Administration
Joel F. Bonder Executive Vice President, General Counsel and Secretary
Patrick J. Foye Executive Vice President
Steven D. Ira Executive Vice President and Co-Founder
Harry G. Alcock Senior Vice President-- Acquisitions
Troy D. Butts Senior Vice President and Chief Financial Officer
Carla Stoner Senior Vice President - Real Estate Accounting
Richard S. Ellwood Director
J. Landis Martin Director
Thomas L. Rhodes Director
John D. Smith Director
</TABLE>
Name Principal Occupations for the Last Five Years
---- ---------------------------------------------
Terry Considine Chief Executive Officer of AIMCO and AIMCO-GP
since July 1994. He is the sole owner of Considine
Investment Co. and prior to July 1994 was owner of
approximately 75% of Property Asset Management,
L.L.C., Limited Liability Company, a Colorado
limited liability company, and its related
entities (collectively, "PAM"), one of AIMCO's
predecessors. On October 1, 1996, Mr. Considine
was appointed Co-Chairman and director of Asset
Investors Corp. and Commercial Asset Investors,
Inc., two other public real estate investment
trusts, and appointed as a director of Financial
Assets Management, LLC, a real estate investment
trust manager. Mr. Considine has been involved as
a principal in a variety of real estate
activities, including the acquisition, renovation,
development and disposition of properties. Mr.
Considine has also controlled entities engaged in
other businesses such as television broadcasting,
gasoline distribution and environmental
laboratories. Mr. Considine received a B.A. from
Harvard College, a J.D. from Harvard Law School
and was formerly admitted as a member of the
Massachusetts Bar (inactive).
I-1
<PAGE>
Peter K. Kompaniez Mr. Kompaniez has been Vice Chairman and a
director of AIMCO since July 1994 and was
appointed President of AIMCO in July 1997. Mr.
Kompaniez has served as Vice President of AIMCO-GP
from July 1994 through July 1998 and was appointed
President in July 1998. Mr. Kompaniez has been a
director of AIMCO-GP since July 1994. Since
September 1993, Mr. Kompaniez has owned 75% of PDI
Realty Enterprises, Inc., a Delaware corporation
("PDI"), one of AIMCO's predecessors, and serves
as its President and Chief Executive Officer. From
1986 to 1993, he served as President and Chief
Executive Officer of Heron Financial Corporation
("HFC"), a United States holding company for Heron
International, N.V.'s real estate and related
assets. While at HFC, Mr. Kompaniez administered
the acquisition, development and disposition of
approximately 8,150 apartment units (including
6,217 units that have been acquired by the AIMCO)
and 3.1 million square feet of commercial real
estate. Prior to joining HFC, Mr. Kompaniez was a
senior partner with the law firm of Loeb and Loeb
where he had extensive real estate and REIT
experience. Mr. Kompaniez received a B.A. from
Yale College and a J.D. from the University of
California (Boalt Hall).
Thomas W. Toomey Mr. Toomey has served as Senior Vice President -
Finance and Administration of AIMCO since January
1996 and was promoted to Executive
Vice-President-Finance and Administration in March
1997. Mr. Toomey has been Executive Vice President
- Finance and Administration of AIMCO-GP similar
capacity with Lincoln Property Company ("LPC") as
well as Vice President/Senior Controller and
Director of Administrative Services of Lincoln
Property Services where he was responsible for
LPC's computer systems, accounting, tax, treasury
services and benefits administration. From 1984 to
1990, he was an audit manager with Arthur Andersen
& Co. where he served real estate and banking
clients. From 1981 to 1983, Mr. Toomey was on the
audit staff of Kenneth Leventhal & Company. Mr.
Toomey received a B.S. in Business
Administration/Finance from Oregon State
University and is a Certified Public Accountant.
Joel F. Bonder Mr. Bonder has served as Executive Vice President
and General Counsel of AIMCO since December 8,
1997. Mr. Bonder has been Executive Vice President
and General Counsel of AIMCO-GP since July 1998.
Prior to joining AIMCO, Mr. Bonder served as
Senior Vice President and General Counsel of NHP
Incorporated from April 1994 until December 1997.
Mr. Bonder served as Vice President and Deputy
General Counsel of NHP Incorporated from June 1991
to March 1994 and as Associate General Counsel of
NHP from 1986 to 1991. From 1983 to 1985, Mr.
Bonder was with the Washington, D.C. law firm of
Lane & Edson, P.C. From 1979 to 1983, Mr. Bonder
practiced with the Chicago law firm of Ross and
Hardies. Mr. Bonder received an A.B. from the
University of Rochester and a J.D. from Washington
University School of Law.
II-2
<PAGE>
Patrick J. Foye Mr. Foye has served as Executive Vice President of
AIMCO and AIMCO-GP since May 1998. Prior to
joining AIMCO, Mr. Foye was a partner in the law
firm of Skadden, Arps, Slate, Meagher & Flom LLP
from 1989 to 1998 and was Managing Partner of the
firm's Brussels, Budapest and Moscow offices from
1992 through 1994. Mr. Foye is also Deputy
Chairman of the Long Island Power Authority and
serves as a member of the New York State
Privatization Council. He received a B.A. from
Fordham College and a J.D. from Fordham University
Law School.
Steven D. Ira Mr. Ira is a Co-Founder of AIMCO and has served as
Executive Vice President of AIMCO since July 1994.
Mr. Ira has been Executive Vice President of
AIMCO-GP since July 1998. From 1987 until July
1994, he served as President of PAM. Prior to
merging his firm with PAM in 1987, Mr. Ira
acquired extensive experience in property
management. Between 1977 and 1981 he supervised
the property management of over 3,000 apartment
and mobile home units in Colorado, Michigan,
Pennsylvania and Florida, and in 1981 he joined
with others to form the property management firm
of McDermott, Stein and Ira. Mr. Ira served for
several years on the National Apartment Manager
Accreditation Board and is a former president of
both the National Apartment Association and the
Colorado Apartment Association. Mr. Ira is the
sixth individual elected to the Hall of Fame of
the National Apartment Association in its 54-year
history. He holds a Certified Apartment Property
Supervisor (CAPS) and a Certified Apartment
Manager designation from the National Apartment
Association, a Certified Property Manager (CPM)
designation from the National Institute of Real
Estate Management (IREM) and he is a member of the
Board of Directors of the National Multi-Housing
Council, the National Apartment Association and
the Apartment Association of Metro Denver. Mr. Ira
received a B.S. from Metropolitan State College in
1975.
Harry G. Alcock Mr. Alcock has served as Vice President of AIMCO
and AIMCO-GP since July 1996, and was promoted to
Senior Vice President - Acquisitions in October
1997, with responsibility for acquisition and
financing activities since July 1994. From June
1992 until July 1994, Mr. Alcock served as Senior
Financial Analyst for PDI and HFC. From 1988 to
1992, Mr. Alcock worked for Larwin Development
Corp., a Los Angeles based real estate developer,
with responsibility for raising debt and joint
venture equity to fund land acquisitions and
development. From 1987 to 1988, Mr. Alcock worked
for Ford Aerospace Corp. He received his B.S. from
San Jose State University.
II-3
<PAGE>
Troy D. Butts Mr. Butts has served as Senior Vice President and
Chief Financial Officer of AIMCO since November
1997. Mr. Butts has been Senior Vice President and
Chief Financial Officer of AIMCO-GP since July
1998. Prior to joining AIMCO, Mr. Butts served as
a Senior Manager in the audit practice of the Real
Estate Services Group for Arthur Andersen LLP in
Dallas, Texas. Mr. Butts was employed by Arthur
Andersen LLP for ten years and his clients were
primarily publicly-held real estate companies,
including office and multi-family real estate
investment trusts. Mr. Butts holds a Bachelor of
Business Administration degree in Accounting from
Angelo State University and is a Certified Public
Accountant.
Richard S. Ellwood Mr. Ellwood was appointed a Director of AIMCO in
12 Auldwood Lane July 1994 and is currently Chairman of the Audit
Rumson, NJ 07660 Committee. Mr. Ellwood is the founder and
President of R.S. Ellwood & Co., Incorporated, a
real estate investment banking firm. Prior to
forming R.S. Ellwood & Co., Incorporated in 1987,
Mr. Ellwood had 31 years experience on Wall Street
as an investment banker, serving as: Managing
Director and senior banker at Merrill Lynch
Capital Markets from 1984 to 1987; Managing
Director at Warburg Paribas Becker from 1978 to
1984; general partner and then Senior Vice
President and a director at White, Weld & Co. from
1968 to 1978; and in various capacities at J.P.
Morgan & Co. from 1955 to 1968. Mr. Ellwood
currently serves as a director of FelCor Suite
Hotels, Inc. and Florida East Coast Industries,
Inc.
J. Landis Martin Mr. Martin was appointed a Director of AIMCO in
199 Broadway July 1994 and became Chairman of the Compensation
Suite 4300 Committee in March 1998. Mr. Martin has served as
Denver, CO 80202 President and Chief Executive Officer and a
Director of NL Industries, Inc., a manufacturer of
titanium dioxide, since 1987. Mr. Martin has
served as Chairman of Tremont Corporation, a
holding company operating through its affiliates
Titanium Metals Corporation ("TIMET") and NL
Industries, Inc., since 1990 and as Chief
Executive Officer and a director of Tremont since
1998. Mr. Martin has served as Chairman of Timet,
an integrated producer of titanium, since 1987 and
Chief Executive Officer since January 1995. From
1990 until its acquisition by Dresser Industries,
Inc. ("Dresser") in 1994, Mr. Martin served as
Chairman of the Board and Chief Executive Officer
of Baroid Corporation, an oilfield services
company. In addition to Tremont, NL and TIMET, Mr.
Martin is a director of Dresser, which is engaged
in the petroleum services, hydrocarbon and
engineering industries.
Carla R. Stoner Ms. Stoner joined AIMCO in July 1997 as Vice
President of Finance and Administration and became
Senior Vice President - Real Estate Accounting in
November 1998. Prior to joining AIMCO, Ms. Stoner
was with National Housing Partners since 1989.
While at National Housing Partners, Ms. Stoner
served as a real estate controller from 1989 to
1992, as Vice President of Accounting from 1992 to
1995 and as Interim Chief Information Officer from
1995 to July 1997. Prior to joining National
Housing Partners, Ms. Stoner was a Senior Auditor
with Deloitte & Touche from 1984 to 1989. Ms.
Stoner received a B.A. in accounting from Virginia
Tech.
<PAGE>
Thomas L. Rhodes Mr. Rhodes was appointed a Director of AIMCO in
215 Lexingon Avenue July 1994. Mr. Rhodes has served as the President
4th Floor and a Director of National Review magazine since
New York, NY 10016 November 30, 1992, where he has also served as a
Director since 1998. From 1976 to 1992 , he held
various positions at Goldman, Sachs & Co. and was
elected a General Partner in 1986 and served as a
General Partner from 1987 until November 27, 1992.
He is currently Co-Chairman of the Board ,
Co-Chief Executive Officer and a Director of
Commercial Assets Inc. and Asset Investors
Corporation. He also serves as a Director of
Delphi Financial Group, Inc. and its subsidiaries,
Delphi International Ltd., Oracle Reinsurance
Company, and the Lynde and Harry Bradley
Foundation. Mr. Rhodes is Chairman of the Empire
Foundation for Policy Research, a Founder and
Trustee of Change NY, a Trustee of The Heritage
Foundation, and a Trustee of the Manhattan
Institute
John D. Smith Mr. Smith was appointed a Director of AIMCO in
3400 Peachtree Road November 1994. Mr. Smith is Principal and
Suite 831 President of John D. Smith Developments. Mr. Smith
Atlanta, GA 30326 has been a shopping center developer, owner and
consultant for over 8.6 million square feet of
shopping center projects including Lenox Square in
Atlanta, Georgia. Mr. Smith is a Trustee and
former President of the International Council of
Shop ping Centers and was selected to be a member
of the American Society of Real Estate Counselors.
Mr. Smith served as a Director for Pan-American
Properties, Inc. (National Coal Board of Great
Britain) formerly known as Continental Illinois
Properties. He also serves as a director of
American Fidelity Assurance Companies and is
retained as an advisor by Shop System Study
Society, Tokyo, Japan.
II-5
<PAGE>
The letter of transmittal and any other required documents should be sent
or delivered by each unitholder or such unitholder's broker, dealer, bank, trust
company or other nominee to the Information Agent at one of its addresses set
forth below.
THE INFORMATION AGENT FOR THE OFFER IS:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<CAPTION>
By Mail: By Overnight Courier: By Hand:
<S> <C> <C>
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
</TABLE>
For information, please call:
TOLL FREE: (888) 349-2005
<PAGE>
To Tender Units of Limited Partnership in Winthrop Growth Investors 1 Limited
Partnership
Pursuant to an Offer to Purchase
Dated July 23, 1999
by
AIMCO PROPERTIES, L.P.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK TIME,
ON August 25, 1999, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
The Information Agent for the offer is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
</TABLE>
By Telephone:
TOLL FREE (888) 349-2005
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
DESCRIPTION OF UNITS TENDERED
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Name(s) and Address(es) of Registered Holder(s) (Please Units in Winthrop Growth
indicate changes or corrections to the name, address and
tax identification number printed below.)
- ---------------------------------------------------------------------------------------------------------------
1. Total Number 2. Number of 3. Total
of Units Owned Units Tendered Number of
(#) for Cash Units Tendered
(#) (#)
--------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
To participate in the offer, you must send a duly completed and executed copy of
this Letter of Transmittal and any other documents required by this Letter of
Transmittal so that such documents are received by River Oaks Partnership
Services, Inc., the Information Agent, on or prior to July 23, 1999, unless
extended (the "Expiration Date"). The method of delivery of this Letter of
Transmittal and all other required documents is at your option and risk, and
delivery will be deemed made only when actually received by the Information
Agent. If delivery is by mail, registered mail with return receipt requested is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery. Delivery of this Letter of Transmittal or any other required documents
to an address other than as set forth above does not constitute valid delivery.
[IF COMPETING OFFER HAS BEEN MADE, THEN COMPLETE AND INSERT RIDER A.]
----------
IF YOU HAVE THE CERTIFICATE ORIGINALLY ISSUED TO REPRESENT YOUR
INTEREST IN THE PARTNERSHIP PLEASE SEND IT TO THE INFORMATION
AGENT WITH THIS LETTER OF TRANSMITTAL.
----------
For information or assistance in connection with the offer or the
completion of this Letter of Transmittal, please contact the Information Agent
at (888) 349-2005 (toll free).
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 2, 4 and 9)
To be completed ONLY if the consideration for the purchase price of Units
accepted for payment is to be issued in the name of someone other than the
undersigned.
[_] Issue consideration to:
Name ___________________________________________
(Please type or Print)
Address ________________________________________
(Include Zip Code)
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 2, 4 and 9)
To be completed ONLY if the consideration for the purchase price of Units
accepted for payment is to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown above.
[_] Mail consideration to:
Name ___________________________________________
(Please type or Print)
Address ________________________________________
(Include Zip Code)
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby acknowledges that he or she has received and
reviewed (i) the Purchaser's Offer to Purchase, dated July 23, 1999 (the "Offer
Date") relating to the offer by AIMCO Properties, L.P. (the "Purchaser") to
purchase Limited Partnership Interests (the "Units") in Winthrop Growth
Investors 1 Limited Partnership, a Massachusetts limited partnership (the
"Partnership") and (ii) this Letter of Transmittal and the Instructions hereto,
as each may be supplemented or amended from time to time (collectively, the
"Offer").
Upon the terms and subject to the conditions set forth in the Offer to
Purchase, and this Letter of Transmittal, the undersigned hereby tenders to the
Purchaser the Units set forth in the box above entitled "Description of Units
Tendered," including all interests in any limited partnership represented by
such units (collectively, the "Units"), at the price of $284 per Unit, less the
amount of distributions, if any, made by the Partnership from the Offer Date
until the Expiration Date (the "Offer Price"), net to the undersigned in cash,
without interest.
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby in accordance with the terms of the Offer, the undersigned
hereby irrevocably sells, assigns, transfers, conveys and delivers to, or upon
the order of, the Purchaser all right, title and interest in and to such Units
tendered hereby that are accepted for payment pursuant to the Offer, including,
without limitation, (i) all of the undersigned's interest in the capital of the
Partnership, and the undersigned's interest in all profits, losses and
distributions of any kind to which the undersigned shall at any time be entitled
in respect of the Units; (ii) all other payments, if any, due or to become due
to the undersigned in respect of the Units, under or arising out of the
agreement of limited partnership of the Partnership (the "Partnership
Agreement"), or any agreement pursuant to which the Units were sold (the
"Purchase Agreement"), whether as contractual obligations, damages, insurance
proceeds, condemnation awards or otherwise; (iii) all of the undersigned's
claims, rights, powers, privileges, authority, options, security interests,
liens and remedies, if any, under or arising out of the Partnership Agreement or
Purchase Agreement or the undersigned's ownership of the Units, including,
without limitation, all voting rights, rights of first offer, first refusal or
similar rights, and rights to be substituted as a limited partner of the
Partnership; and (iv) all present and future claims, if any, of the undersigned
against the Partnership, the other partners of the Partnership, or the general
partner and its affiliates, including the Purchaser, under or arising out of the
Partnership Agreement, the Purchase Agreement, the undersigned's status as a
limited partner, or the terms or conditions of the Offer, for monies loaned or
advanced, for services rendered, for the management of the Partnership or
otherwise.
The undersigned hereby irrevocably constitutes and appoints the Purchaser
and any designees of the Purchaser as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Units, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to vote or act in such manner as any such attorney
and proxy or substitute shall, in its sole discretion, deem proper with respect
to such Units, to do all such acts and things necessary or expedient to deliver
such Units and transfer ownership of such Units on the partnership books
maintained by the general partner of the Partnership, together with all
accompanying evidence of transfer and authenticity to, or upon the order of, the
Purchaser, to sign any and all documents necessary to authorize the transfer of
the Units to the Purchaser including, without limitation, the "Transferor's
(Seller's) Application for Transfer" created by the National Association of
Securities Dealers, Inc., if required, and upon receipt by the Information Agent
(as the undersigned's agent) of the Offer Price, to become a substitute limited
partner, to receive any and all distributions made by the Partnership from and
after the Expiration Date of the Offer (regardless of the record date for any
such distribution), and to receive all benefits and otherwise exercise all
rights of beneficial ownership of such Units, all in accordance with the terms
of the Offer. This appointment is effective upon the purchase of the Units by
the Purchaser as provided in the Offer and shall be irrevocable for a period of
ten years following the termination of the Offer. Upon the purchase of Units
pursuant to the Offer, all prior proxies and consents given by the undersigned
with respect to such Units will be revoked and no subsequent proxies or consents
may be given (and if given will not be deemed effective).
3
<PAGE>
In addition to and without limiting the generality of the foregoing, the
undersigned hereby irrevocably (i) requests and authorizes (subject to and
effective upon acceptance for payment of any Unit tendered hereby) the
Partnership and its general partners to take any and all actions as may be
required to effect the transfer of the undersigned's Units to the Purchaser (or
its designee) and to admit the Purchaser as a substitute limited partner in the
Partnership under the terms of the Partnership Agreement; (ii) empowers the
Purchaser and its agent to execute and deliver to each general partner a change
of address form instructing the general partner to send any and all future
distributions to the address specified in the form, and to endorse any check
payable to or upon the order of such unitholder representing a distribution to
which the Purchaser is entitled pursuant to the terms of the offer, in each
case, in the name and on behalf of the tendering unitholder; (iii) agrees not to
exercise any rights pertaining to the Units without the prior consent of the
Purchaser; and (iv) requests and consents to the transfer of the Units, to be
effective on the books and records of the Partnership as of May 1, 1999.
Notwithstanding any provision in a Partnership Agreement or any Purchase
Agreement to the contrary, the undersigned hereby directs each general partner
of the Partnership to make all distributions after the Purchaser accepts the
tendered Units for payment to the Purchaser or its designee. Subject to and
effective upon acceptance for payment of any Unit tendered hereby, the
undersigned hereby requests that the Purchaser be admitted to the Partnership as
a substitute limited partner under the terms of the Partnership Agreement. Upon
request, the undersigned will execute and deliver additional documents deemed by
the Information Agent or the Purchaser to be necessary or desirable to complete
the assignment, transfer and purchase of Units tendered hereby and will hold any
distributions received from the Partnership after the Expiration Date in trust
for the benefit of the Purchaser and, if necessary, will promptly forward to the
Purchaser any such distributions immediately upon receipt. The Purchaser
reserves the right to transfer or assign, in whole or in part, from time to
time, to one or more of its affiliates, the right to purchase Units tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering unitholders to receive payment for Units validly tendered and accepted
for payment pursuant to the Offer.
By executing this Letter of Transmittal, the undersigned represents that
either (i) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or an entity deemed
to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any
such plan, or (ii) the tender and acceptance of Units pursuant to the Offer will
not result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer, the Purchaser may not
be required to accept for payment any of the Units tendered hereby. In such
event, the undersigned understands that any Letter of Transmittal for Units not
accepted for payment may be destroyed by the Purchaser (or its agent). Except as
stated in the Offer, this tender is irrevocable, provided that Units tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date,
or unless already accepted for payment, any time after September 21, 1999.
The undersigned has been advised that the Purchaser is an affiliate of the
general partner of the Partnership and no such general partner makes any
recommendation as to whether to tender or refrain from tendering Units in the
Offer. The undersigned has made his or her own decision to tender Units.
The undersigned hereby represents and warrants for the benefit of the
Partnership and the Purchaser that the undersigned owns the Units tendered
hereby and has full power and authority and has taken all necessary action to
validly tender, sell, assign, transfer, convey and deliver the Units tendered
hereby and that when the same are accepted for payment by the Purchaser, the
Purchaser will acquire good, marketable
4
<PAGE>
and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances, conditional sales agreements or other obligations
relating to the sale or transfer thereof, and such Units will not be subject to
any adverse claims and that the transfer and assignment contemplated herein are
in compliance with all applicable laws and regulations.
Our records indicate that the undersigned owns the number of Units set
forth in the box above entitled "Description of Units Tendered" under the column
entitled "Total Number of Units Owned." If you would like to tender only a
portion of your Units, please so indicate in the space provided in the box above
entitled "Description of Units Tendered."
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligations of the undersigned
shall be binding upon the heirs, personal representatives, trustees in
bankruptcy, legal representatives, and successors and assigns of the
undersigned.
The undersigned further represents and warrants that, to the extent a
certificate evidencing the Units tendered hereby (the "original certificate") is
not delivered by the undersigned together with this Letter of Transmittal, (i)
the undersigned represents and warrants to the Purchaser that the undersigned
has not sold, transferred, conveyed, assigned, pledged, deposited or otherwise
disposed of any portion of the Units, (ii) the undersigned has caused a diligent
search of its records to be taken and has been unable to locate the original
certificate, (iii) if the undersigned shall find or recover the original
certificate evidencing the Units, the undersigned will immediately and without
consideration surrender it to the Purchaser; and (iv) the undersigned shall at
all times indemnify, defend, and save harmless the Purchaser and the
Partnership, its successors, and its assigns from and against any and all
claims, actions, and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages, judgments, costs, charges, counsel
fees, and other expenses of every nature and character by reason of honoring or
refusing to honor the original certificate when presented by or on behalf of a
holder in due course of a holder appearing to or believed by the partnership to
be such, or by issuance or delivery of a replacement certificate, or the making
of any payment, delivery, or credit in respect of the original certificate
without surrender thereof, or in respect of the replacement certificate.
5
<PAGE>
================================================================================
SIGNATURE BOX
(See Instruction 2)
- --------------------------------------------------------------------------------
Please sign exactly as your name is printed on the front of this Letter of
Transmittal. For joint owners, each joint owner must sign. (See Instruction 2).
TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS
OF A CORPORATION OR OTHER PERSONS ACTING IN A FIDUCIARY OR REPRESENTATIVE
CAPACITY, PLEASE COMPLETE THIS BOX AND SEE INSTRUCTION 2.
The signatory hereto hereby tenders the Units indicated in this Letter of
Transmittal to the Purchaser pursuant to the terms of the Offer, and certifies
under penalties of perjury that the statements in Box A, Box B and, if
applicable, Box C and Box D are true.
X________________________________________________________
(Signature of Owner)
X________________________________________________________
(Signature of Joint Owner)
Name and Capacity (if other than individuals):___________
Title:___________________________________________________
Address:_________________________________________________
(City) (State) (Zip)
Area Code and Telephone No. (Day):
(Evening):_____________________________
Signature Guarantee (If Required)
(See Instruction 2)
Name and Address of Eligible Institution:_________________________
________________________________________________________________________________
________________________________________________________________________________
Authorized Signature: X____________________________
Name:___________________________________________________
Title:________________________________ Date:______________________________
================================================================================
6
<PAGE>
TAX CERTIFICATIONS
(See Instruction 4)
By signing the Letter of Transmittal in the Signature Box, the unitholder
certifies as true under penalty of perjury, the representations in Boxes A, B
and C below. Please refer to the attached Instructions for completing this
Letter of Transmittal and Boxes A, B and C below.
================================================================================
BOX A
SUBSTITUTE FORM W-9
(See Instruction 4 - Box A)
- --------------------------------------------------------------------------------
The unitholder hereby certifies the following to the Purchaser under
penalties of perjury:
(i) The Taxpayer Identification No. ("TIN") printed (or corrected) on the
front of this Letter of Transmittal is the correct TIN of the unitholder, unless
the Units are held in an Individual Retirement Account ("IRA"); or if this box
[_] is checked, the unitholder has applied for a TIN. If the unitholder has
applied for a TIN, a TIN has not been issued to the unitholder, and either (a)
the unitholder has mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office, or (b) the
unitholder intends to mail or deliver an application in the near future (it
being understood that if the unitholder does not provide a TIN to the Purchaser,
31% of all reportable payments made to the unitholder will be withheld); and
(ii) Unless this box [_] is checked, the unitholder is not subject to
backup withholding either because the unitholder: (a) is exempt from backup
withholding; (b) has not been notified by the IRS that the unitholder is subject
to backup withholding as a result of a failure to report all interest or
dividends; or (c) has been notified by the IRS that such unitholder is no longer
subject to backup withholding.
Note: Place an "X" in the box in (ii) above, only if you are unable to
certify that the unitholder is not subject to backup withholding.
================================================================================
================================================================================
BOX B
FIRPTA AFFIDAVIT
(See Instruction 4 - Box B)
================================================================================
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership if
50% or more of the value of its gross assets consists of U.S. real property
interests and 90% or more of the value of its gross assets consists of U.S. real
property interests plus cash equivalents, and the holder of the partnership
interest is a foreign person. To inform the Purchaser that no withholding is
required with respect to the unitholder's Units in the Partnership, the person
signing this Letter of Transmittal hereby certifies the following under
penalties of perjury:
(i) Unless this box [_] is checked, the unitholder, if an individual, is a
U.S. citizen or a resident alien for purposes of U.S. income taxation, and if
other than an individual, is not a foreign corporation, foreign partnership,
foreign estate or foreign trust (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);
(ii) The unitholder's U.S. social security number (for individuals) or
employer identification number (for non-individuals) is correct as furnished in
the blank provided for that purpose on the front of the Letter of Transmittal;
(iii) The unitholder's home address (for individuals), or office address
(for non-individuals), is correctly printed (or corrected) on the front of this
Letter of Transmittal.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
================================================================================
================================================================================
BOX C
SUBSTITUTE FORM W-8
(See Instruction 4 - Box C)
================================================================================
By checking this box [_], the person signing this Letter of Transmittal
hereby certifies under penalties of perjury that the unitholder is an "exempt
foreign person" for purposes of the Backup Withholding rules under the U.S.
Federal income tax laws, because the unitholder has the following
characteristics:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and
(iii)Neither engages, nor plans to engage, in a U.S. trade or business that
has effectively connected gains from transactions with a broker or
barter exchange.
================================================================================
INSTRUCTIONS
7
<PAGE>
FOR COMPLETING LETTER OF TRANSMITTAL
1. REQUIREMENTS OF TENDER. To be effective, a duly completed and signed Letter
of Transmittal (or facsimile thereof) and any other required documents must
be received by the Information Agent at one of its addresses (or its
facsimile number) set forth herein before 5:00 p.m., New York Time, on the
Expiration Date, unless extended. To ensure receipt of the Letter of
Transmittal and any other required documents, it is suggested that you use
overnight courier delivery or, if the Letter of Transmittal and any other
required documents are to be delivered by United States mail, that you use
certified or registered mail, return receipt requested.
WHEN TENDERING, YOU MUST SEND ALL PAGES OF THE LETTER OF TRANSMITTAL,
INCLUDING TAX CERTIFICATIONS (BOXES A, B, and C).
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING UNITHOLDER AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION
AGENT. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
2. SIGNATURE REQUIREMENTS.
Individual and Joint Owners -- After carefully reading and completing the
Letter of Transmittal, to tender Units, unitholders must sign at the "X" in
the Signature Box of the Letter of Transmittal. The signature(s) must
correspond exactly with the names printed (or corrected) on the front of
the Letter of Transmittal. If the Letter of Transmittal is signed by the
unitholder (or beneficial owner in the case of an IRA), no signature
guarantee on the Letter of Transmittal is required. If any tendered Units
are registered in the names of two or more joint owners, all such owners
must sign this Letter of Transmittal.
IRAs/Eligible Institutions -- For Units held in an IRA account, the
beneficial owner should sign in the Signature Box and no signature
guarantee is required. Similarly, if Units are tendered for the account of
a member firm of a registered national security exchange, a member firm of
the National Association of Securities Dealers, Inc. or a commercial bank,
savings bank, credit union, savings and loan association or trust company
having an office, branch or agency in the United States (each an "Eligible
Institution"), no signature guarantee is required.
Trustees, Corporations, Partnership and Fiduciaries -- Trustees, executors,
administrators, guardians, attorneys-in-fact, officers of a corporation,
authorized partners of a partnership or other persons acting in a fiduciary
or representative capacity must sign at the "X" in the Signature Box and
have their signatures guaranteed by an Eligible Institution by completing
the signature guarantee set forth in the Signature Box of the Letter of
Transmittal. If the Letter of Transmittal is signed by trustees,
administrators, guardians, attorneys-in-fact, officers of a corporation,
authorized partners of a partnership or others acting in a fiduciary or
representative capacity, such persons should, in addition to having their
signatures guaranteed, indicate their title in the Signature Box and must
submit proper evidence satisfactory to the Purchaser of their authority to
so act (see Instruction 3 below).
3. DOCUMENTATION REQUIREMENTS. In addition to the information required to be
completed on the Letter of Transmittal, additional documentation may be
required by the Purchaser under certain circumstances including, but not
limited to, those listed below. Questions on documentation should be
directed to the Information Agent at its telephone number set forth herein.
Deceased Owner (Joint Tenant) - Copy of death certificate.
Deceased Owner (Others) - Copy of death certificate (see also
Executor/Administrator/Guardian below).
Executor/Administrator/Guardian - Copy of court appointment documents for
executor or administrator; and (a) a
copy of applicable provisions of the
will (title page, executor(s)' powers,
asset distribution); or (b) estate
distribution documents.
Attorney-in-Fact - Current power of attorney.
8
<PAGE>
Corporation/Partnership - Corporate resolution(s) or other
evidence of authority to act.
Partnership should furnish a copy of the
partnership agreement.
Trust/Pension Plans - Unless the trustee(s) are named in the
registration, a copy of the cover page
of the trust or pension plan, along with
a copy of the section(s) setting forth
names and powers of trustee(s) and any
amendments to such sections or
appointment of successor trustee(s).
4. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If consideration is to be issued
in the name of a person other than the person signing the Signature Box of
the Letter of Transmittal or if consideration is to be sent to someone
other than such signer or to an address other than that set forth on the
Letter of Transmittal in the box entitled "Description of Units Tendered,"
the appropriate boxes on the Letter of Transmittal should be completed.
5. TAX CERTIFICATIONS. The unitholder(s) tendering Units to the Purchaser
pursuant to the Offer must furnish the Purchaser with the unitholder(s)'
taxpayer identification number ("TIN") and certify as true, under penalties
of perjury, the representations in Box A, Box B and, if applicable, Box C.
By signing the Signature Box, the unitholder(s) certifies that the TIN as
printed (or corrected) on this Letter of Transmittal in the box entitled
"Description of Units Tendered" and the representations made in Box A, Box
B and, if applicable, Box C, are correct. See attached Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
guidance in determining the proper TIN to give the Purchaser.
U.S. Persons. A unitholder that is a U.S. citizen or a resident alien
individual, a domestic corporation, a domestic partnership, a domestic
trust or a domestic estate (collectively, "U.S. Persons"), as those terms
are defined in the Code, should follow the instructions below with respect
to certifying Box A and Box B.
Box A - Substitute Form W-9.
Part (i), Taxpayer Identification Number -- Tendering unitholders must
certify to the Purchaser that the TIN as printed (or corrected) on
this Letter of Transmittal in the box entitled "Description of Units
Tendered" is correct. If a correct TIN is not provided, penalties may
be imposed by the Internal Revenue Service (the "IRS"), in addition to
the unitholder being subject to backup withholding.
Part (ii), Backup Withholding -- In order to avoid 31% Federal income
tax backup withholding, the tendering unitholder must certify, under
penalty of perjury, that such unitholder is not subject to backup
withholding. Certain unitholders (including, among others, all
corporations and certain exempt non-profit organizations) are not
subject to backup withholding. Backup withholding is not an additional
tax. If withholding results in an overpayment of taxes, a refund may
be obtained from the IRS. Do not check the box in Box A, Part (ii),
unless you have been notified by the IRS that you are subject to
backup withholding.
When determining the TIN to be furnished, please refer to the
following as a guide:
Individual accounts - should reflect owner's TIN.
Joint accounts - should reflect the TIN of the owner whose name
appears first.
Trust accounts - should reflect the TIN assigned to the trust.
IRA custodial accounts - should reflect the TIN of the custodian (not
necessary to provide).
Custodial accounts for the benefit of minors - should reflect the TIN
of the minor.
Corporations, partnership or other business entities - should reflect
the TIN assigned to that entity.
By signing the Signature Box, the unitholder(s) certifies that the TIN
as printed (or corrected) on the front of the Letter of Transmittal is
correct.
9
<PAGE>
Box B - FIRPTA Affidavit -- Section 1445 of the Code requires that
each unitholder transferring interests in a partnership with real
estate assets meeting certain criteria certify under penalty of
perjury the representations made in Box B, or be subject to
withholding of tax equal to 10% of the purchase price for interests
purchased. Tax withheld under Section 1445 of the Code is not an
additional tax. If withholding results in an overpayment of tax, a
refund may be obtained from the IRS. Part (i) should be checked only
if the tendering unitholder is not a U.S. Person, as described
therein.
Box C - Foreign Persons -- In order for a tendering unitholder who is
a Foreign Person (i.e., not a U.S. Person, as defined above) to
qualify as exempt from 31% backup withholding, such foreign Unitholder
must certify, under penalties of perjury, the statement in Box C of
this Letter of Transmittal, attesting to that Foreign Person's status
by checking the box preceding such statement. Unless the box is
checked, such unitholder will be subject to 31% withholding of tax.
6. VALIDITY OF LETTER OF TRANSMITTAL. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of a Letter of
Transmittal and other required documents will be determined by the
Purchaser and such determination will be final and binding. The Purchaser's
interpretation of the terms and conditions of the Offer (including these
Instructions for this Letter of Transmittal) will be final and binding. The
Purchaser will have the right to waive any irregularities or conditions as
to the manner of tendering. Any irregularities in connection with tenders,
unless waived, must be cured within such time as the Purchaser shall
determine. This Letter of Transmittal will not be valid until any
irregularities have been cured or waived. Neither the Purchaser nor the
Information Agent are under any duty to give notification of defects in a
Letter of Transmittal and will incur no liability for failure to give such
notification.
7. ASSIGNEE STATUS. Assignees must provide documentation to the Information
Agent which demonstrates, to the satisfaction of the Purchaser, such
person's status as an assignee.
8. TRANSFER TAXES. The amount of any transfer taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
9. MINIMUM TENDERS. [Check Partnership Agreement: A unitholder may tender any
or all of his, her or its Units.]
10. CONDITIONAL TENDERS. No alternative, conditional or contingent tenders will
be accepted.
10
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER - - Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
GIVE THE
TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF - -
<S> <C>
1. An individual account The individual
2. Two or more individuals (joint account) The actual owner of the account or,
if combined funds, the first individual on the account
3. Husband and wife (joint account) The actual owner of the account or, if joint funds,
either person
4. Custodian account of a minor (Uniform Gift to The minor (2)
Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the only contributor,
the minor (1)
6. Account in the name of guardian or committee for a The ward, minor or incompetent person (3)
designated ward, minor or incompetent person (3)
7. a. The usual revocable savings trust account The grantor trustee (1)
(grantor is also trustee)
b. So-called trust account that is not a legal The actual owner (1)
or valid trust under state law
8. Sole proprietorship account The owner (4)
9. A valid trust, estate or pension trust The legal entity (Do not furnish the identifying
number of the personal representative or trustee
unless the legal entity itself is not designated
in the account title.) (5)
10. Corporate account The corporation
11. Religious, charitable, or educational The organization
organization account
12. Partnership account held in the name of the The partnership
business
13. Association, club, or other tax-exempt The organization
organization
</TABLE>
11
<PAGE>
14. A broker or registered nominee The broker or nominee
15. Account with the Department of Agriculture in the The public entity
name of a public entity (such as a State or local
government, school district, or prison) that receives
agricultural program payments
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's or incompetent person's name and furnish such person's
social security number or employer identification number.
(4) Show your individual name. You may also enter your business name. You may
use your social security number or employer identification number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATIONNUMBER ON SUBSTITUTE
FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
- An international organization or any agency or instrumentality
thereof.
- A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the
Code.
- An exempt charitable remainder trust, or a non-exempt trust described
in section 4947 (a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
12
<PAGE>
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section
1441 of the Code.
- Payments to Partnerships not engaged in a trade or business in the
U.S. and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid
in money.
- Payments made by certain foreign organizations.
- Payments made to an appropriate nominee.
- Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include
the following:
- Payments of interest on obligations issued by individuals. NOTE: You
may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you
have not provided your correct taxpayer identification number to the
payer. Payments of tax exempt interest (including exempt interest
dividends under section 852 of the Code).
- Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments of mortgage interest to you.
- Payments made to an appropriate nominee.
Exempt payees described above should file a substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(A),
6045, and 6050A of the Code.
PRIVACY ACT NOTICE - - Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give correct taxpayer identification
numbers to payers who must report the payments to the IRS. The IRS uses the
numbers for identification purposes. Payers must be given the numbers whether or
not recipients are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a correct taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER - - If
you fail to furnish your correct taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING - - If
you make a false statement with no reasonable basis that results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION - - Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
13
<PAGE>
The Information Agent for the offer is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
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<CAPTION>
<S> <C> <C> >
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
By Telephone:
TOLL FREE (888) 349-2005
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<PAGE>
AIMCO PROPERTIES, L.P.
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222
July 23, 1999
Dear Unitholder:
We are offering to acquire up to 10,425 units of limited partnership
interests in Winthrop Growth Investors 1 Limited Partnership. Our offer presents
you with the following two options, which you are free to accept or reject in
any combination you like:
1. You may tender each of your units in exchange for $284 in cash, in
which case you may recognize a gain or loss for federal income tax
purposes.
2. You may retain any or all of your units. If you choose to retain
any or all of your units, your rights as a holder of units will remain
unchanged. You will continue to participate in gains and losses of your
partnership, and you will receive distributions, if any, payable in respect
of your units.
If more units are tendered than we are offering to acquire, we will prorate
the purchase so that the same approximate percentage of units tendered by each
partner will be purchased. We are offering to acquire any and all outstanding
units in your partnership. Our offer is not subject to any minimum number of
units being tendered. You will not be required to pay any commissions or fees in
connection with any disposition of your units pursuant to our offer. Our offer
price will be reduced for any distributions subsequently made by your
partnership prior to the expiration of our offer.
There are advantages and disadvantages to you of accepting or declining our
offer. The terms of the offer are more fully described in the enclosed
materials. These documents describe the material risks and opportunities
associated with the offer, including certain tax considerations. Please review
these documents carefully. The general partner of your partnership, which is
owned by us, has substantial conflicts of interest with respect to the offer.
Accordingly, the general partner of your partnership makes no recommendation to
you as to whether you should tender or refrain from tendering your units in the
offer.
If you desire to tender any of your units in response to our offer, you
should complete and sign the enclosed letter of transmittal in accordance with
the enclosed instructions and mail or deliver the signed letter of transmittal
and any other required documents to River Oaks Partnership Services, Inc., which
is acting as the Information Agent in connection with our offer, at the address
set forth on the back cover of the enclosed Offer to Purchase. The offer will
expire at 5:00 p.m. New York City time on August 25, 1999, unless extended. If
you have questions or require further information, please call the Information
Agent, toll free, at (888) 349-2005.
Very truly yours,
AIMCO PROPERTIES, L.P.
